Understanding Standard of Care Issues in Construction Claims

Defect and delay claims comprise the majority of construction litigation. Neither are straightforward. Usually, they are very complicated and difficult to quantify, especially without the aid of an expert. However, an even more complex task resides in determining Standard of Care claim basis issues.

Standard of Care measures are often thought of as a tacit component of the 5-10% mark-up contractors charge for General Conditions. General Conditions are not the same as overhead costs, for which a contractor must also carry a percentage. The architect friendly AIA 201 General Conditions of the Contract for Construction, iterates those provisions. These will include indirect, or ‘soft-costs,’ necessary to prosecute the project. However the document is sometimes ambiguous. It behooves one to keep this in mind when a claim involves an architect under an AIA contract.

General conditions for a contractor will include:

1. Effective management programs in field and office
2. Adequate man-power
3. Proper documentation
4. True project schedules
5. Accurate billing
6. Comportment and punctuality
7. Professionalism
8. Safety programs
9. Trustworthiness
10. Housekeeping

There are many moving parts within each of these responsibilities. Whenever a project is failing in a general or specific way, you can be sure that the contractor is not making good on his Standard of Care. Also that some elements of the general conditions of the contract are not being fulfilled. Either as a means of merely saving the contractor some time, a few dollars, or because he simply doesn’t know better.

Even the most seasoned construction attorneys struggle mightily with Standard of Care; as it pertains to a contractor or architect’s basic responsibilities in facilitating the General Requirements portion of the contract found in the specifications. The problem is two-fold. The first is in assessing a contract value to any given component of the General Conditions pertaining to a claim. Then factoring a percentage of that to the actual value. The second, larger challenge lies in the valuation of soft-costs that tend to be assessed only subjectively. This doesn’t help facilitate a claim.

Despite the inscrutability, it follows that if all of a contractor’s works were defective, than he would be entitled to 0% General Conditions. Therefore; there must be a scalable monetization within the middle-ground of 0 – 100% degree of satisfaction of the requirement that can be calculated into dollars. Indeed, a contractor will merely index his General Conditions billing according to the overall level or degree of completion of the works; not the value of his general conditions (which he can only derive from payroll records and receipts).

Quantifying standard of care claims for design professionals is an even more slippery slope. Because all of their work is only iterated in the general conditions, and pertains to a product with null value (drawings). The old (1997) AIA documents did a poor job of defining a design professional’s Standard of Care responsibilities, and gave the architect too much leeway.

“The architect’s services shall be performed as expeditiously as is consistent with professional skill and care, and the orderly progress of the project (B101).”

Subsequently, the AIA felt that the B101 “misstated the architect’s responsibilities.” These were updated in 2007 to say:

“The architect will perform his services consistent with the level of skill and care ordinarily practiced by architects under the same or similar circumstances.”

This amended statement served to clarify the notion that there are great differences in “the level of skill and care” afforded different contracts. Additionally, that there is no one size fits all. That said, contractors and design professionals pare down their scope of work by skimping on general provisions, or requirements, to the level they feel a given commission merits, or what they are willing to concede; as general requirements are notoriously the first services to be tweaked.

The AIA feels the above language is sufficient for the purpose, yet the amended document is less than explicit. This is purely by design, as it serves as built-in protection for its constituents. Conversely, contract General Requirements can go on for hundreds of pages. Nevertheless; seasoned professionals, arbiters, and experts alike know exactly what an architect’s chief responsibilities are. They can readily identify non- or under performance in three ways:

1. Providing complete design documentation
2. Timely turnaround of contractor submittals and payment applications
3. Quality control and sign-off of construction elements

The documentation provision is key to the facilitation of the pre-construction process, before there is a contractor to deflect that responsibility. Indeed, an architect’s contract may be terminated before a project is shovel-ready, or, conversely, because it isn’t shovel-ready. It is more difficult to pin-down an architect during the construction process. This is because his responsibilities are generally thought to be substantially complete by such time. In truth, architects give short-shrift to services during construction, and are minimally involved in day-to-day site work.

The trouble comes when a project breaks ground with an incomplete set of drawings, causing the builder to lose contract calendar days, as well as decreased productivity . Both of which are claims that require a lot of work to establish, and seldom done efficiently without an expert. It is noteworthy that agencies in many states include a no damage for delay clause in their contracts. Many find this one-sided and unreasonable. Effectively, this position aims to (often unfairly) assign all delay risk to the contractor, who must take this into consideration in his bid.

In absence of the AIA 201 document – which is incorporated by reference into most of the AIA contract family, the CSI Masterformat, Division I, enumerates General Requirements in hierarchal order, that is intuitive, and can facilitate your Standard of Care claim, once you come to understand its relevance.

Given the variable and often indistinct language of AIA 201 General Conditions, we must instead assume that there is an overarching standard of care that applies to all design and construction professionals, whether explicitly stated or not. Thus, a contractual party may not argue that he does not have responsibility unless it is explicitly stated. Accordingly, a great deal of professional insight is necessary to deconstruct the General Conditions of a given contract in such a way that they:

1. Are shown to be demonstrably intrinsic to the contract work
2. Can be quantified into cost

Only a seasoned expert can offer a professional opinion as to the constituents of standard of care claim. He would have years of both practical and administrative construction experience, as well as an ability to impart the indispensability of soft-costs to a court in such a way that it can understand how poor standard of care manifests into all facets of a stressed project. Accordingly, eloquence is critical in writing standard of care expert reports, as it is in testifying.

A construction defect expert may, or may not, be able to opine on standard of care issues; however, a delay expert may know even less. As he is only concerned with the schedule, and the cost of delay and disruption. For this reason, delay and defect experts are often separate entities. Yet, a fully rounded expert could address both sorts of claims, as well as standard of care claims. Such an expert could provide a more comprehensive and cohesive report than would three separate entities. In my mind, this is more bang for the buck, and also presents a broadly experienced expert to the court.