Print

Library

Risk Management Articles


Tampering With Language in Technical Specifications
By Brian Relle


A lack of care by the design team in the preparation and coordination of technical specifications (TS) leads to significant contractor claims for delay and additional cost. Ultimately, the owner is put into the position of either enforcing an unreasonable interpretation of the project requirements, or losing trust in the design team's capabilities. Neither situation promotes favorable relationships among project participants and often leads to acrimonious disputes that can only be resolved in litigation.

TS specifically describe the materials or components to be used on a project, how they are to be prepared and installed, and the standard of workmanship or level of finish anticipated. They also build upon one another, so the requirements contained in one part of the specification rely on those in another part. This is particularly true where a combination of specifications describe a major system or component, such as the building envelope, or HVAC or electrical systems.

Where the TS are neglected in favor of notes on drawings or details, and other graphic representations of the work, there is a good possibility ambiguities in the TS' language will arise. This will inevitably require interpretation from the design team, but should it differ from the contractor's interpretation particularly in matters bearing on the contractor's bid assumptions and costs unnecessary friction on the project will ensue, leading to serious cost impacts.

Where do TS come from, anyway?

Technical specifications come from a variety of sources including the following:

Each provider of TS has its own particular interests at stake. For example, equipment manufacturers develop TS to sell their products. If the manufacturer's name and specification for a particular product are used in the bid documents, the supplier can pretty much count on a sale for the project (assuming there is no requirement to consider products of equal characteristics).

Industry associations prepare TS that set standards for workmanship, tolerances, finishes, and performance. The specs are intended to serve the interests of the association's members by establishing minimum acceptable standards of workmanship, and limiting competition within the industry to contractors that meet the standards espoused.

In many cases, specifiers draw from several different sources to complete the TS package for a particular project.

What is meant by 'tampering'?

Tampering with the language of TS involves changing, replacing, modifying, or rewording the written requirements without fully understanding how the new specs may affect other parts of the contract documents. Often, tampering occurs when the design team wants to pass off certain design risks to the contractor, or when the owner is in a hurry to complete the bid package and is uncertain about what specific materials or components are desired. Tampering may also occur under the following conditions:

Tampering with the language in TS can result in the contractor and trades being uncertain how to proceed. This uncertainty, coupled with the inherent risks contractors take on nearly every project, can mean the difference between a successful financial outcome and one that ends in a costly dispute.

Tampering affects the project

Specification tampering affects the project in a number of ways. For example, where changes to a specification result in ambiguous requirements, the contractor or specialty subcontractor may claim the specification is defective; meaning, it cannot be complied with, it is impossible (or economically impractical) to perform, or it simply fails to accomplish the intended design purpose.

Claims for damages due to defective specifications may extend into the hundreds of thousands of dollars. The owner and his design team must carefully review a contractor's allegations of design deficiencies and be willing to negotiate with and compensate him for any changes to the design caused by ambiguous specifications.

Even where the design is deemed adequate, poor coordination of the TS can increase the administrative burdens of both contractor and design team. Contractors obtain clarification of the design intent through the request for information (RFI) process. The process involves formulating a request for a clarification, submitting it in written form, obtaining a review of the request by the appropriate design consultant, then obtaining the design team's written response. The process is initiated by the contractor and can take an extended period of time (over 100 days, in some cases). RFIs can also lead to further confusion over the design intent. Bottom line? Tampering with the TS creates opportunities for an increased number of RFIs.

Tampering with the TS can also affect the submittal process. If the specs are confusing, then the contractor's submittals are likely to contain questions or qualifications, which may prompt the design team to reconsider the designs and make wholesale changes during the approval of submittals. To avoid increased costs, the design team must respect the difference between providing simple design clarifications and making unnecessary changes to the scope of the work.

The most damaging result of poorly-crafted TS is project delay. A change in the spec of a major equipment item, for example, can lead to a late delivery date affecting the critical path of the project. An extended path may entitle the contractor to a time extension and exposes the owner to delay damages, which can range from a few thousand dollars per day to well over $10,000 dollars per day for each day the contractor and its affected subcontractors are prevented from performing critical path work.

Delay damages include the cost of on-site superintendents, engineering and administrative staff, general conditions expenses, and extended equipment costs. The contractor may also be entitled to idle labor costs and an apportionment of the unabsorbed home office overhead caused by project delays.

Moreover, when the completion of a project is delayed, the owner faces uncertain additional costs, such as:

  1. Interest on construction loan borrowings.
  2. Loss of revenue if the facility is intended for commercial or production purposes.
  3. Costs of cover for similar facilities (i.e. holding over on a commercial office lease).

Substantial delays also create disputes between the owner and contractor, exposing both parties to further costs in a protracted litigation, along with steep legal fees and expenses.

Staying on the path

Due to the explosion in technology used for design and construction, as well as for building and process management systems, construction will become even more challenging in the future than it is today. Smart building applications will fuel the integration of computer and building sciences, electronics, and automation technologies. As such, successful projects will be evaluated according to the design team's performance in the preparation of complete and accurate technical specifications, appropriately tailored to meet a project's specialized needs.

Brian Relle is a director with KPMG LLP's global forensic practice group, where he focuses on construction management consulting and dispute resolution services. He is a graduate of both Rensselaer Polytechnic Institute and the University of Baltimore School of Law, and can be reached via e-mail at brelle@kpmg.com.

Reprinted with permission of The Construction Specifications Institute, 99 Canal Center Plaza, Suite 300, Alexandria, VA 22314, from The Construction Specifier.

Privacy Policy | Legal Notice | Site Map | Search

Website 2006 InsPro Corporation.
All Rights Reserved.