CONSTRUCTION DEFECT COST OF REPAIR CLAIMS

The construction defects expert’s process of assigning responsibility and allocating defect repair costs basically centers around:

1. Identifying the parties potentially responsible for designing, installing, supervising, inspecting, approving and maintaining the work,
2. Identifying the parties actually responsible for designing, installing, supervising, inspecting, approving and maintaining the work,
3. Establishing the percentage of responsibility that each party bears,
4. Establishing the amount of repair cost that each party bears, e.g., repair cost allocation.

Cost of repair allocation analysis is similar in many ways to the causation analyses we perform on other types of construction disputes.

We are unaware of any magic formulas defining either the accountability or financial liability/allocation processes. Using algebra to solve for unknowns won’t work and neither will the use of advanced mathematics such as Laplace Transforms. These processes demand much more traditional applications.

And, in contrast to the methods employed by a few less experienced construction defect consultants we have encountered, a particular party should not always be allocated a particular percentage of the damages. For example, the general contractor should not always be allocated a certain percentage of the damages simply because it was the “general contractor.” Life is not so simple, and neither is the construction defect cost of repair causation and allocation processes.

COST OF REPAIRS ALLOCATION

The process of allocating either estimated or actual repair costs to the responsible parties will depend in substantial part on the quality and quantity of the available project documentation. Any or all of the documentation typically produced through the discovery process could have an impact on the final construction defect cost allocation. There is not enough space available in this blog to address the potential relevance of each category of documentation. Therefore, we focus here on only a few categories:

BID PROPOSALS

Assuming that the contractor’s bid proposal was incorporated into the contract documents, any inclusions or exclusions in the bid could be relevant. For example, we have seen situations wherein the subcontractor’s bid excluded work for which the HOA had later sued the general contractor.

CONTRACTS

Experts begin with an analysis of the construction contract when assigning responsibility for the work. However, even Standard Forms such as AIA Documents can conflict with each other and/or State law. Our construction defects experience reveals that custom agreements are much more likely to contain ambiguities relating to the parties responsibilities. Similarly, written amendments that seemed clear to the parties at the time often become murky after a building dispute arises.

PLANS AND SPECS

Was it built per plans and specs? Such an easy question to ask, but often such a difficult question to answer. Consider a few of the possibilities:

  1. The work was built according to the plans/specs and is not deemed defective;
  2. The work was built according to the plans/specs, was not defective at the time of acceptance but is deemed defective now;
  3. The work was not built according to the plans/specs, was not found defective at the time of acceptance but is now found defective;
  4. The work was not built according to the plans/specs, was not deemed defective at the time of acceptance because it satisfied and still satisfies the intent of the plans/specs, but is now deemed defective by the opposition.
  5. The plans and/or specs contain errors, the work was built to the plans but was not found defective at the time of acceptance, is now deemed defective by the opposition but not by defendants experts.
  6. The plans and/or specs contain errors, the work was not built to the plans, was not found defective at the time of acceptance, is now deemed defective by the opposition and by defendants experts.

A judge once asked me, “You would agree with me that, just because it wasn’t built per plans and specs, doesn’t necessarily mean the work should be or has to be repaired or replaced?”

PARTIES’ COURSE OF DEALING

The parties course of dealing during the construction project can modify the terms of the written agreement. Email, personnel interviews and depositions are often the best ways to investigate this topic. For example, the contract indicates that the trade contractor was to call for inspections but the general contractor later orally assumed responsibility for that task.

JOB INSPECTIONS

It is not unusual for numerous parties to have written construction supervision and inspection responsibilities on a project. We have worked on projects where the owner, developer, architect, engineer(s), general contractor, subcontractor, and outside agencies each inspected the work in an effort to ensure that it was built per plans, specs, codes, ordinances, etc. The task then becomes, how to reasonably allocate the cost of construction defect repairs under the circumstances where so many parties might have contributed.

WARRANTIES

Construction projects are most often comprised of many different products and types of work. And, it is not uncommon for many of these materials and products to have significantly different warranty types and durations. Grading and drainage can have a short duration warranty period and can be adversely impacted after the CO by HOA and homeowners, which might then affect the structural warranty. On the other hand, manufactured products can sometimes have 30, 40 or 50 year warranties.

EXPERTS IN DEFECT REPAIR COSTS

Considering the many factors that can be involved in the construction defect litigation process, and recognizing that precise arithmetical formulas are not applicable to the cost of repair allocation process, one can readily understand the value of analysis and opinion of an experienced construction defects consultant and construction defects damages expert witness.
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The Holloway Consulting Group – Construction Defects Experts

Email: steve.holloway@disputesinconstruction.com




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