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Getting to the Bottom of Construction-Related Defects

Deciphering the scope of work versus the contract documents to determine the true cause of a loss.

January 15, 2016 Photo

The forensic engineering assignment typically has a scope of work that begins with something to the effect of “determine the cause of the observed damage to the….” Often this includes an inspection and analysis to determine if the observed damage is related to a particular event. For example, an assignment might ask a forensics professional to determine if the hailstorm on June 1 caused functional hail-related damage to a roof. Or, it might ask to delineate the structural fire-related damage.

In some cases, however, the damage being investigated is attributable to the method of construction or the omission or deviation from a generally accepted practice. This would constitute a construction-related defect. In some policies, this is excluded and, therefore, is not pursued in the investigation unless the policyholder is the contractor or if subrogation opportunities exist.

The phrase “construction-related defect” might conjure images of a window installed backwards or a roof drain emptying into a sink. As silly as these may sound, they are just as real as the struggle to find skilled, competent craftsmen. There was a time when working in the construction trades would be a lifetime endeavor. One might start his career carrying water, graduate to mixing mortar, then eventually laying stone. That was a time when labor was relatively inexpensive and the limited opportunities drove people into a lifelong investment in the trades. It also was a time when it would take 40 years to build a church. Needless to say, today’s bigger, cheaper, faster world is not as accommodating to the lifelong craftsmen. Although they exist, skilled craftsmen are few and far between and, therefore, the occasional backward window or missing flashing events do occur. More often than not, however, the construction-related defect is born before ground is broken and the first brick is laid.

Construction-related defects or omissions stemming from the procurement process can be just as frequent, if not more so, than the skill-related defects. Typically when a building is constructed, a general contractor (GC) is hired to build it according to project documents. Seldom does the GC perform all of the required work on the project. Instead, most of it is subcontracted to several trades. On a simple project, a warehouse with little office space and a few bathrooms could include 30 different subcontracts for items such as concrete, steel, floor finishes, paint, mechanical systems, and so on.

Each of these contracts has a very specific scope of work that makes up the payment mechanism for the subcontractor, and the devil (defect) is in the details. Who does the flashing—the rough carpenter or mason? Who makes the domestic water line connection at the building pad—the plumber or the utilities subcontractor? Critical details can be overlooked in the process, only to appear weeks, months, or years later after a particularly heavy rain or high-velocity wind event.

When a construction-defect investigation arises and the statute of limitations has not precluded a subrogation opportunity, there are some items that need to be secured:

  • Project documents: These typically include the drawings and specifications that outline how things should have been built. Also within this package will be references to dozens of other documents, namely, the building codes that were enforced at the time of construction.
  • Contracts: These should contain detailed scopes of work that delineate the responsibility of each subcontractor. Where two trades meet (at through-wall flashing, for example) is where guidance should be given on who is responsible for what. It typically would be incumbent upon the GC to perform work where there was a hole in the scope, provided that the work was part of the contractual project documents.
  • Construction-related correspondence: Especially interesting would be all of the architect supplemental instruction (ASI), requests for information (RFI), and change orders. An RFI is initiated by the GC or a subcontractor to ask for additional details or if a conflict has been discovered. The ASI changes the project documents via clarifications or additional details. This doesn’t always constitute a change in scope, but if it does, it would trigger a change order that changes the contract value and schedule.

After thorough review of these documents, a site visit, and a conversation with those who were present, the forensic engineer can begin to decipher the scope of work versus the contract documents in order to determine the cause of the loss and whether the observed damage resulted from a recent event or a latent defect.        

About The Authors
David P. Amori

David P. Amori, PE, RRC, is vice president, engineering services, for EFI Global Inc. He has been a CLM Fellow since 2013 and can be reached at  david_amori@efiglobal.com

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