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Post-Construction Building Issues

As an owner or property manager you probably have encountered a problem with at least one of your buildings after construction has been completed and turned over to operations. More likely you have experienced more than a few issues on previous projects whether they were new construction, additions, remodels or fit-outs. The problems that get caught in the no-man’s land between a contractor’s callback warranty and manufacturers’ warranties are sometimes exasperating to resolve.

The familiar dilemma is who will fix it and who will bear the costs?

Some of post-construction issues can be rather complicated. A series of errors or deficiencies during the project cycle may have created a snowball effect such that each by itself did not expose any particular fault. But when the problem does surface after the work is complete, in hindsight the questions are asked: Was a portion of the design possibly flawed? Was an acceptance procedure deficient? Was maintenance or service at fault? Was there a factory error? When the unequivocal cause of the problem can be isolated to just one of these usual suspects the next actions are relatively straightforward as to who is responsible. But all of these have potential to cause or exacerbate a later discovered problem, and the project participants generally know this. So when the light casts in their direction some participants unfortunately try to deflect and attempt to lay the problem at the feet of another. It can be an increasingly vexing situation to resolve.

Even as much as everyone might mutually and diligently endeavor to discover the source of the problem, each participant only knows what he or she knows and only sees what she or he is looking for through the lens of individual experience, knowledge, and analytical process. Add in contractual liability and unsurprisingly the table might turn with denials and unproven arguments.

Trying to sort all this out it’s no wonder construction projects are broadly considered to be prone to litigation. Yet, when projects do go to legal proceedings, one of the focal questions for adjudication is predictably: what was the underlying cause(s) of the problem that led to the dispute? The negative symptoms are obvious, but their root-cause(s) not always. Even leading up to the unwelcome juncture of an arbitration or court case, a number of different theories usually emerge from all sides which surely have some bias depending on the party. It can get messy and costly all the while the problem with the building still remains.

Of course everyone wants to avoid this experience on their next project.

Although the standard construction contract documents provide a number of means for quality control and minimizing disputes as well as some methods to resolve a dispute, these are not implemented the same from project to project. Like any set of tools how skillfully they are utilized is the variable. With each project there is a different mix of project participants, unique interactions of personalities, distinctive project management styles, and a diverse combination of experience and knowledge. The administrative and management tools are still all be the same, but how well can they be best employed and maximized?


Acceptance Process

Punch-list: The punch-list is one part of the Owner’s acceptance process. Traditionally the A/E team prepares the punch-list. The architect and engineers (mechanical, electrical, plumbing, civil, etc.) each have specific knowledge and experience for inspecting their respective portions of work in comparison to their designs. These services usually are fee- or hourly-based, but some owners ill-advisedly elect early in the contract negotiations to save some costs by either largely limiting A/E field inspections during construction including punch-list or transferring the punch-list preparation to the CM’s scope of services. If the CM is tasked to prepare the punch-list, then in theory the CM ought to have competencies equivalent to the A/E team for appropriately inspecting the work to be able to identify deficiencies or non-compliance with designs. Some CM’s are staffed to do so and prudently involve the A/E team accordingly when issues warrant; however, if not, then faulty or defective work could be missed simply due to a lack of knowing what to look while examining all portions of the work. Whichever group is contracted to prepare the punch-list be certain the people who will be assigned to perform inspections are suitably experienced and qualified.

Document the punch-list. There will be iterative versions of it as the listed items are completed, re-inspected, accepted, or not accepted. Keeping detailed records including dates, times, photographs, references to the contract documents, attendees, are all very useful and indispensable documentation.

Commissioning: This is another part of the Owner’s acceptance process that has evolved in recent decades to essentially avert as many post-construction operational issues as possible through a comprehensive verification and documentation process. Commissioning any or all of the building’s subsystems (HVAC, electrical, lighting, life/safety, plumbing, etc.) ideally starts at the beginning of a project with a document referred to as the OPR – the Owner’s Project Requirements. The OPR, if prepared properly, defines the performance criteria, quality standards, energy efficiency goals, equipment longevity, and operations & maintenance expectations for each subsystem. By the end the project the OPR is the foundation for the metrics applied in determining whether such requirements have been fulfilled.

Cost is a factor and not all owners choose to contract for a full commissioning process or to hire a commissioning agent. Some deem just the functional tests to be sufficient – also referred to as witness testing which is only a part of a comprehensive commissioning process. Nevertheless, the field testing procedures must be well-designed and fully-coordinated for ensuring adequate data collection for analyses of the system’s actual operations. New building systems are becoming more and more sophisticated technologically. They require increasingly greater degrees of testing and performance verification. Like testing a glider compared to a jet aircraft there is a lot more stuff to demonstrate that it is all properly functioning.  Most new controls systems offer monitoring capabilities with an array of data points from which to select and include in your project controls package. Deciding early in the project which data points are necessary and appropriate is essential and should be informed by the design engineers, commissioning agent, and facility operations staff.

The subcontractors must also be timely prepared for the scheduled witness tests. Fragmented tests due to a lack of readiness to test the entire system by the scheduled date not only lead to a more difficult process, but inevitably increase costs. Ensure that the commissioning agent or 3rd party conducting the functional tests is empowered to direct the Contractor(s) on behalf of the Owner. This may require corresponding provisions in the construction agreement between the Owner and the Contractor. No matter to what extent commissioning will be conducted it must be outlined and detailed early in the project to avoid disagreements later in terms of criteria, contractual obligations, and responsibilities.

Testing and Verification: Most contract documents contain project specifications that will reference test methods and standards such as ASTM or similar (ANSI, ASHRAE, AASHTO, etc.) for quality testing of materials and installation. In some project spec manuals the Contractor must provide evidence to the Owner that the product or the installation meets the referenced requirements. For in situ quality verification the Contractor may be obligated by the contract documents to hire a 3rd-party to collect samples and analyze them off-site in a laboratory, or to conduct field tests. The Owner thereby relies on the Contractor for 3rd-party selection based qualifications and credentials, or stipulates by contract the minimum criteria for testing agencies and laboratories.

Contractually the Contractor has an obligation to ensure quality, and therefore must self-evaluate the work for fulfilling the quality specifications and requirements. The Contractor is obviously passing the testing fees and expenses along to the Owner regardless of whether they are separately shown in the schedule of values or are embedded in another fixed line item amount. But because owners must be careful not to interfere with the Contractor’s progress for completing the work, some owners default to boilerplate language in contract documents that require the Contractor to evidence its test results to the Owner as proxy for owner testing.

However, an owner should always maintain its right to test and verify any portion of the work. If properly coordinated with the construction schedule and fully documented, rarely will owner-conducted testing interfere with or delay a contractor’s progress in its performance of the work. If a tested portion of work fails to meet the specified standard or performance criteria, be certain that contractual procedures are available to reject the work or even stop the work without penalty to the Owner for delay or interruption. Until the portion of work is demonstrated to meet or exceed the referenced standard or specified criteria, the Owner is not obligated to accept or pay for such portion of work. Thus it behooves the Owner to independently check and test various work in progress rather than waiting until Substantial Completion or just prior to turn-over.

Certificate of Final Completion: For some projects a Certificate of Final Completion is used to evidence agreement between the parties that all work is complete and in accordance with the contract documents. Not all projects incorporate a Certificate of Completion. Instead, certification of the final payment application for the full amount indicates that all work is satisfactorily completed. In either case be certain that the language contained on the Certificate of Final Completion does not limit the rights of the Owner in the event a problem is discovered post-completion.


Contract Documents and Specifications

A solid set of contract documents can save an owner a lot grief (and money) later in a project. The contract documents typically include the construction agreement with the Contractor, the drawings, the specifications, approved shop drawings, along with other written documents specifically designated in the agreement as part of the “Contract Documents”.

When a post-construction issue does arise the Contract Documents are often pulled out of the files and perused again to find the particular requirements for the related portion of work. Once the relevant section(s) of the specifications are retrieved and/or the drawing detail, then it should be an open-and-shut case, but sometimes to the dismay of the Owner incomplete, vague, or ambiguous language written in the specifications is open for inconsistent interpretation.

This can be a nasty problem especially if the matter advances to a legal proceeding when someone else like an arbitrator or a jury will interpret the language. Having complete and well-written language that clearly and unequivocally describes the requirements of the work is the best means to facilitate a resolution even before a legal action. Yes, it costs money to develop such writing. Most project specifications, whether written on the drawing sheets or in a project spec manual, are copied, cut, pasted, and stitched together from other projects. So taking the extra time to comb through them and ensure that the language sufficiently defines the requirements; is written for consistent interpretation; and, does not contradict any other sections of the Contract Documents or references made therein is a wise allocation of funds for insuring against a protracted, costly dispute resolution later. Of course not every construction dispute is so easily prevented or resolved, but better to prevent as many as possible than to fix them.

Just as important are the references to other written materials contained in the Contract Documents. As mentioned above the ASTM, ANSI, ASHRAE, and similar other standards are frequently incorporated in the specifications as too are product and equipment manufacturers’ installation literature. Obtain these additional materials as necessary to ensure that portions of work which are questioned or disputed meet all of requirements of the linked references. Some referenced materials also contain yet more references other documents that could be significant in resolving the issue. Research them because something within those interrelated documents could be pivotal in expediently reaching a solution that would otherwise be overlooked had no one read through the material.


Final Payment and Retainage

The Owner is not obligated to pay for any portion of the work not in accordance with the contract documents. Yet, some owners sometimes still feel pressured to issue full and final payment because of (i) apprehension over its contractual obligations, (ii) threatening correspondence, or (iii) intimidation even though a building problem(s) still persists. In some cases the Owner simply does not have sufficient evidence for withholding any amount of payment because the cause of the persisting problem cannot be clearly identified at the time payment is demanded as due.

If the AIA G702 form is used for the final payment application, or one of its related forms such as G732, note that the Architect or CM (or both) certify the application on behalf of the Owner. Once a payment application is certified, which very well might be premature if problems indicative of a defect(s) in the work are still present at the time of certification, the Owner has a more difficult road to justify its refusal for accepting a portion of the work and for withholding an equal amount of payment.

Demanding that all problems be fixed before issuing final payment including retainage is not unreasonable. It’s a sensible stipulation, but one that begins to erode if the cause of each problem cannot be indisputably identified; fault cannot be patently assigned; and/or, a mutually agreeable solution cannot be reached.

Measurable data or quantitative data is the most defensible and often the best information for negotiating an issue to its conclusion. If the measured results do not meet or exceed the requirements, a portion or all of the final payment may be withheld by the Owner equal to the fair value of correcting and/or replacing the work.

Adequately defining performance criteria at the beginning of the project can alleviate contention over the measured results. For example, if the acoustical requirements (STC, NCC, NCR, etc.) were established as part of the OPR at the beginning of the project, then any disagreement or complaints about the noise levels in a space can be settled by measuring and calculating the acoustical performance. The same applies for interior space temperatures and relative humidity that can easily be field measured to compare against the stated requirements of the OPR and/or the contract documents.

The Contractor has the obligation to meet or exceed the stated performance criteria, and therefore, bears as much responsibility to correct all deficiencies in the work, which inherently necessitates identifying the cause(s); formulating a permanent solution; and, timely implementing corrective actions as a condition for receiving final payment. Unfortunately, not all contractors proficiently execute these steps when prolonged, unresolved problems still linger at the time final payment is due. Some contractors will instead dedicate their efforts toward reckless arguments and threatening claims to compel the Owner to make final payment. Relentlessly badgering the Owner for payment is another often-employed tactic for bypassing an imminent expenditure of their resources to perform a careful analysis or to simply fix the problem.

If there are still unresolved problems that have yet to be sorted out, withholding final payment or a portion thereof is justifiable until the problems are properly corrected or the matter resolved.


Specialty Consultants and Experts

Sometimes specialty consultants or experts are warranted to help sort out causation, responsibility, and corrective options. Does the construction agreement adequately describe the use of experts? Will both parties engage experts separately or jointly? Who bears the additional fees and expenses? What if one or both parties reject the conclusions or recommendations by the expert(s)? What is the next step? Is engaging an expert consultant for some issues even worthwhile?

These are the usual questions that many owners wrestle with when considering experts as a means to the end. The extra cost and expense are a major consideration, and thus a manufacturer’s representative(s) is sometimes suggested alternatively as a subject-matter expert for a particular product and its installation. But not all reps are created equal, and for that matter not all are qualified or credentialed to opine on the work. Be cautious with reps who may also be dealers. While many reps can provide valuable information, recognize that it might not be enough to catapult an issue to resolution.

An expert consultant fundamentally provides accurate, impartial information that could be consistent with; contradict; or, supplement whatever other information has already been gathered and/or furnished by others. Knowing what to look for; where to look for it; how to analyze it; and, what to do about it is the essential job. It may be simple or complex, but objectively examining the issue without bias is what both the Owner and the Contractor should, if mutually striving for resolution, equally expect from an expert consultant.

So early in the project during contract negotiations anticipate that experts could be needed. Additional procedures in the contract documents might be necessary to fully describe how the process will be implemented, should it be required, to equitably and efficiently settle a disputed portion of the work using an expert. Consider the alternative when perhaps forced onto the course of hiring experts late in the project without having any defined and agreed upon procedures, which would probably complicate an already rather strained situation.



No project is perfect. Something will arise after completion – hopefully nothing major, but whatever the problem is, the means to solve it should already be in place early on in the project. Otherwise the issues become more consequential and more costly. Timely identifying a problem and efficiently disposing of it through the processes and procedures suggested in this article are the primary objective. Not all post-construction problems and disputes can be resolved by these methods, but reducing the potential for them is discernibly advantageous. As may be self-evident project-specific circumstances and conditions are also critical in tailoring the administration and management. Just as essential are the intangibles of teamwork and cooperation between the Owner, the Contractors, and designers. Providing the means of well-defined, fully articulated procedures to address and resolve problems coincidentally supports effective teamwork.

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April 2024


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