Changes in technology, communications, and finance and construction techniques have greatly accelerated the construction process. The emergence of “fast track” and “design/build” projects has put even more time pressure on all parties to construction from the architect to the finishing subcontractors. The phrase, “time is money,” has rarely had a more appropriate application.
At the same time, general contractors and subcontractors have noted an overall deterioration in the quality and completeness of plans and specifications from which they are to bid and work. Whether this is driven by unreasonable time demands, inexperienced staff at the architectural and engineering firms, or financial pressures that weigh against careful review, the implications for the general contractor and subcontractors are the same. Conflicting information, design errors and omitted items significantly increase the risk of later disputes, delays and claims.
ZZZ Sheet Metal encountered precisely these problems with regard to its work on an entertainment/retail development. The subcontractor was the successful bidder for installation of the HVAC system for the large complex. The plans and specifications were quite complex, and the schedule was extremely aggressive. In the bidding process, ZZZ personnel noted several design items that appeared to be inconsistent, but did not have time to evaluate every potential issue with the plans and specifications. It “red flagged” the most major items, and otherwise submitted a responsive bid generally consistent with the plans and specifications. The bid was accepted and work commenced immediately.
As the work proceeded, ZZZ’s project manager noted three distinct types of problems with the design documentation:
- There were frequent and fairly obvious conflicts within the specifications and within the drawings. As to these, the subcontractor made its best guess at what it thought was intended.
- There were some items referred to in the specifications that were not covered in the plans and vice-versa. Some were quite major. For example, the specifications made reference to certain air filtration equipment that was not indicated anywhere on the plans. The ZZZ project manager made a note to ask the general contractor about those items.
- There were some items in the specifications that directly conflicted with the plans, and the same circumstances as to the plans relative to the specifications. For example, the plans showed a fan motor installation that would not be workable using the specified fan motors. The plans also showed wiring that would not be sufficient for purposes of the variable speed controls referenced in the specifications. Again, the subcontractor made note of the items so that they could be discussed with the general contractor.
The project was exceptionally challenging from beginning to end, and the construction meetings tended toward chaos. The problems with the plans and specifications were project-wide, and triggered hostile exchanges between project participants on a weekly basis. The architect and mechanical engineer were frequently not represented at the meetings, and the subcontractor’s questions were most often set aside on the “we will get back to that” list. In the meantime, intense pressure was being placed on the subcontractors to move forward. ZZZ felt that it had no choice but to continue to make its “best guess” on each item, and to proceed accordingly.
As the project neared completion, the conflicting plans and specifications started to translate into financial claims. These claims arrived in the form of delay claims, claims for constructive changes, and claims that various items were implicit in the documents despite the various conflicts. ZZZ had a number of entries on such lists, and also had items carved out of its payment requests based upon the assertion of the general contractor that certain items of work performed by the subcontractor were unauthorized. A showdown was inevitable. As the project reached substantial completion, ZZZ and a number of the other subcontractors demanded payment and threatened litigation against the general contractor, the owner and the architect, with regard to the various items. From ZZZ’s perspective, the claim amount had become very significant, and the subcontractor felt that it had acted in good faith at every stage of the process. However, the questionable competence and non-responsiveness of other parties to the project had made it impossible for the subcontractor to proceed in an orderly way. The “best guess” strategy had seemed the only feasible approach at the time, but was now presenting all sorts of problems related to the final payment.
Facing the withholding of its final payment and claims by the owner (pursued through the general contractor) that the installed HVAC system was deficient, ZZZ filed a lien, and commenced an action demanding payment. Like the project, the lawsuit was complicated, lengthy and somewhat chaotic, but the facts were ultimately presented to the court. ZZZ felt confident that it had done the right thing under almost impossible circumstances, and expected to prevail on all accounts.
The court did not totally agree. The findings were as follows:
- As to direct conflicts within the specifications or within the drawings, the subcontractor had an obligation to detect the conflicts, bring them to the attention of the higher tiers, and demand clarification. These were items the court referred to as “patent ambiguities,” and the court held ZZZ responsible for the implications of not obtaining clarification (despite its making some attempts in that regard).
- As to the items that were missing from the plans, and included in the specifications or vice-versa, the court held that the subcontractor was obligated to interpret the plans and specifications as inclusive of the items contained in one set, but not the other. To the extent that, for example, an item was referenced in the specifications, but not indicated on the plans, the court found that the subcontractor had an obligation to point out the discrepancy, and obtain direction as to where the missing item should have been indicated on the plans. Again, ZZZ was held financially responsible for the implications of not properly inquiring as to the missing information.
- As to items where direct conflicts existed between the specifications and the drawings, the court held that the principle of “order of precedence” applied and that the specifications should govern. The court’s rationale was that the specifications were the most detailed in their description of the project and, therefore, the best indicator of what the architect/engineer and owner required. To the extent that ZZZ installed items in accordance with the specifications, rather than the drawings, the court found that the subcontractor had acted properly, and was entitled to be paid.
The notion that plans and specifications will be “perfect” has never reflected the true state of the construction industry. However, the frequency of sloppy, erroneous or incomplete plans seems to be on the rise. While various categories of conflicts within and between the design documents may be approached differently from a legal perspective, the subcontractor’s governing principle should be the same. If omissions, conflicts or errors are noted in conjunction with the subcontractor’s (careful) review of the plans and specifications, they should be reported in writing with a request for clarification. It is possible that, despite the best efforts of the subcontractor, no clarification will be forthcoming. In that event, the subcontractor should notify the general contractor in writing of what the subcontractor intends to do unless instructed otherwise, and should proceed based upon the more detailed and inclusive requirement.