Construction Project Risk Management – the Sooner, the Better!

I participated in the Idaho State Bar Real Property Section’s annual CLE program last week, and got even more value than I expected.  Kudos to the section’s officers and to the ISB CLE staff.

I say I got even more than I expected, because this section always put on high-value programs.

I plan to write several blog posts amplifying some of my key lessons learned.

Lesson One – the Lawyer’s Role in Construction Project Risk Management.

Franklin G. Lee of the Givens, Pursley law firm (Boise, ID) represents real estate developers and other project owners.  He provided excellent guidance on what a lawyer can do to help the owner mitigate risk.

  1. Help the Owner Select the Right Team, Right up Front. Select designers, contractors, and subcontractors early on, and then conduct due diligence on each one.

Check the financial condition of each one, check their payment history, and any litigation history.

Help the owner get to know the key people who will be working on the project. Weed out any potentially problematic people early, before they can cause expensive delays later on.

  1. A Good Scope of Work is Even Better than a Good Contract. If the owner, the designer, and the contractor do a good job of defining the scope of work, the risk of errors (and litigation) go way down.

Resist the temptation to start work before everyone has the same understanding of what “work” each will be doing.

  1. Get the Contractor’s Confirmation of the Adequacy of the Scope of Work.

I visited a coastal harbor some years ago. I noticed that the name of the largest yacht in the harbor was “Change Order.”

If the owner takes the time to get the contractor’s written confirmation that the SOW is sufficient for the project, down goes the risk of buying a yacht!

Conclusion.

As with so many things in life, a little time properly used before the start of a project can save a lot of time, money, and relationship damage later on.

Michael Oswald

michael@msochartered.com

www.msochartered.com

Please note: the above post contains educational information. It is not intended as legal advice. Engage an attorney who is licensed in your state to get advice on dealing with any specific legal issue.

© 2020 Michael S. Oswald

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