Construction Project

Documentation: A Basic
Checklist of Documents That
Should Be Maintained to Prove
a Construction Claim
29

2471

By
It is not uncommon for a contractor that has encountered a construction claim to
be surprised to learn that he has not maintained the necessary construction
project documentation to supports his claim or defense. This article will set out
the basic construction documentation that should be maintained and why it is
necessary.
In order to prevail on a claim it is necessary to prove that the contractor is entitled
to prevail on the claim (entitlement) and then prove the additional costs incurred
as a result of the claim (quantum) . Typically, entitlement and the quantum aspect
of the claim are proved by reviewing how the contractor planned on building the
project (as-planned), as well as how the anticipated costs relate to the actual
conditions and costs that were encountered during construction (as-built). While
oral testimony is admissible evidence, greater weight is given to documentary
evidence. Thus, the existence of as-planned and as-built project documentation
are necessary to prove a claim.
Many government construction contracts require a contractor to maintain
complete project cost records. Those records may be subject to audit in the event
of a claim for a change order. In light of the increasing tendency of government
agencies to respond to delay claims with liquidated damages and/or false claims
of statute violations, the existence of detailed records are the only viable method
of countering such defenses.
The following checklist includes the basic project documentation that will be
necessary to prepare and prove, or conversely disprove, a construction claim. The
size and type of a project will obviously impact the amount of documentation that
will be maintained for each project. Larger projects require greater care in the
preparation and maintenance of project documents, while smaller projects cannot
economically support such extensive documentation. However, before a project is
commenced, a claim-savvy contractor will review this basic checklist and set in
place a project documentation policy.
1. Construction Contract and Purchase Orders
The first document that must be reviewed in any construction dispute is the
construction contract. The contract must be reviewed to determine which clauses
apply to the contractors entitlement to prevail on the claim and what, if any,
clauses limit the contractor's ability to recover the additional costs created by the

claim. In addition to the construction contract, purchase orders are typically used
to establish delays.
2. Bid Documents
In this author's experience, it is not uncommon for missing and incomplete bid
documentation to undermine the whole claim. The lack of such documentation
calls into question both the contractor's professionalism and the veracity of the
purported as-planned costs. In order to prove that the additional project costs
incurred were reasonable, it is necessary to establish that the underlying contract
amount was appropriate. The bid documentation should include the following:
takeoffs, unit pricing, subcontractor and supplier bids, calculations setting forth
expected production, overhead and profit mark-ups, and mark-ups for labor
burdens.
3. Schedule Data and Devices
In order to prevail on a delay claim, the party asserting the claim must prove that
the delay was excusable, compensable and critical. To prove those three elements
it is necessary to establish the anticipated project scheduling which was the basis
for project bid. A comparison is then made with the as-built scheduling. Therefore,
the contractor must have an as-planned and have regularly updated as-built
schedules. Ideally, the schedules should be based on a critical path method. In
addition, any weekly "look ahead" schedules should be retained. If any third
parties had input into the scheduling, the related documentation should be
maintained.
4. Project Diaries
Project superintendents should maintain a diary that contains daily entries that, at
a minium, set forth: (1) each day's weather conditions, (2) on-site subcontractors
and employees, (3) deliveries of critical materials, (4) on-site visits by third parties
(e.g. project architect, owner or engineer), (5) discovery of hidden site conditions,
discrepancies in plans and/or conflicts, (6) important conversations, and (7) any
other noteworthy event. If a delay, hidden condition or project conflict is
encountered, the project superintendent should start a separate report that tracks
the discovery and resolution of that particular problem.
5. Change Orders and Change Order Logs
Almost every project will have one or more change orders. The delay in
responding to change orders can impact the completion the project. Thus, it is
important to retain a record when the change order was submitted and when it
was approved or rejected.
6. Plans, Specifications, Shop Drawings, Requests For Information and
Submittals
The design documents and related correspondence concerning the design of the
project should be retained. A sound practice is to create a request for information
log, a shop drawing log and submittal log that includes the date that the
document was tendered and the date a response was received, along with any
germane comments. Such logs simplify a review of delays in the completion of the
project.
7. Project Correspondence

Any correspondence concerning the project should be retained. Typically, separate

correspondence files are established for each party to the construction project.
Ideally, the correspondence should be docketed (i.e. a chronological list that is
maintained at the front of the file that states the subject matter for each letter,
including who the letter is from and to whom it is written). If a critical delay is
identified, a separate folder should be maintained for that issue. Copies of the key
correspondence should be placed in that separate issue file, as well as in the
regular correspondence file.
8. Job Cost Reports and Estimates
For larger projects, it is a common cost- accounting practice to produce a report of
the actual cost of each line item on the bid for comparison to the estimated costs
for that line item. Once again, these records are a key element of the as-planned
and as-built analysis. In addition, a review of those reports will help identify cost
overruns that may be created by changed job site conditions.
9. Financial Statements
A component of every delay claim is home office overhead. The home office
overhead calculation is based on the general administrative expenses for the
delay years as well as prior years. In addition, more elaborate computer-based
accounting systems allow for detailed accounting reports for each project.
10. Employee Payroll Records
On many projects manpower can be the largest expense. The ability to establish,
through payroll reports, that the manpower loading for a particular project was
not as anticipated when the project was bid is a key part of any disruption and/or
delay claim. Typically, the manpower loading is depicted on a graph, with one side
for hours and the other side for the date the labor was provided. For example,
spikes in the labor loading graph can depict disruption.
11. Photographs and Videos
Dated photographs and videos are useful in determining percentages of
completion. They can also be useful in establishing that the work was performed
in accordance with the plans and specifications.
12. Miscellaneous documents
If it becomes necessary to pursue a mechanic's lien, stop notice and/or bond
claim, additional project documentation may be critical. For example,
documentation that evidences the start and completion of the project (i.e.
punchlists) will be useful in determining the time for recording a mechanic's lien.
Additional documentation should include preliminary lien notices and lien
releases.
In most contracts there are claims notice requirements. All correspondence and
memorandums that prove that notice of a claim was given in a timely manner
should be maintained. Similarly, notices that the contractor is proceeding under
protest should be maintained.
Another category of documents are meeting minutes. Such minutes can be from
weekly meetings with the owner, general contractor and/or the design team.
Ideally, those minutes reflect completion of prior activities and open activities.

Conclusion
It is the claimant's obligation to prove its claim. If he cannot do so, he will not
prevail. Alternatively, complete records will be necessary to defeat an owner's
delay claim. The lack of complete business records can result in additional costs in
proving or disproving a construction claim. If the documents are complete and
well organized, the claimant's consultant will spend less time preparing and
documenting the claim, thus reducing the cost of presenting the claim.
The author of this article has prepared a request for information log, a shop
drawing log and submittal log, as well as related construction administration
forms. Upon written request the author will make the forms available for the
nominal cost of copying and postage.
This bulletin is published periodically to provide general information about current
legal issues. The article should not be construed as advice on a specific question.
If you have a specific legal question or need legal advice, you should contact an
attorney. This article was written by William C. Last, Jr. of Last, Harrelson & Faoro.
Mr. Last is an attorney who has been specializing in Construction Law for over
eighteen years. Mr. Last also holds a California A&B contractors license. If you
have any questions Mr. Last can be contacted at 650-696-8350 1998