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A lawyer discusses the administration of construction projects: You need to have a team in place


The amount of money people spend on construction and decoration is second only to the cost of buying the real estate itself. However, owners try to cut back and save money by limiting the services of architects, interior designers, owner's representatives and construction managers, by not having them oversee the work or by having them spend the bare minimum amount of time. They view their time as an unnecessary expense and would rather see that money spent on tangible items, such as kitchen cabinets or furnishings. No matter how well-educated the owner is, they need to have a team of professionals in place to administer the actual construction.

Owners wish that they could just hand a set of plans to a contractor, go on vacation and have it turn out exactly they way they are drawn, but that is not the way construction works. Not every detail is in the plans. Sometimes the design is not even complete when the project commences. Some things are worked out in the field. Sometimes plans are not as complete as they should be. Sometimes hidden conditions surface during construction which require that the plans be changed. New designs may have to be drawn to address this. Construction is always subject to change. Without the right team in place, an individual cannot possibly handle all of this and run a business or work at the same time.

Owners also need the objectivity of having a design professional overseeing the actual work. No matter how good a contractor is, he is never going to fire himself. If the project is going poorly or the contractor has not given the project the time and attention it needs, it helps to have an independent third-party point this out and work with you and legal counsel to sort out what to do about it.

This is especially important if the contractor is being paid on a percentage of completion basis. The owner is not equipped to make decisions on whether 30 % was completed or 50 %. He also has a personal interest. Therefore, any differences of opinion about this topic are sure to lead to disputes. When clients administer the construction themselves, they tend to pay too much money relative to the amount of work done, since they are not trained to determine what percentage of the work has been completed. When the contractor demands more money and the apartment has been demolished, the client will pay almost anything just to keep the project going, so that the contractor does not walk off the job. After they overpay the contractor and later find out that very little work has been done, they seek legal counsel to try to determine how to get some of that money back.

Some owners take the half way approach. They hire a design professional to observe work on an hourly basis, but only "when requested" by the client That makes for a very imperfect relationship. Invariably something will go wrong on the project and the owner will ask the design professional why they did not see that problem sooner and do something about it. The design professional will respond by saying "Because you only asked me to spend an hour or so at the site once a month." The owner is expecting a lot, but is not allowing the design professional the amount of time he needs to get the job done properly. I frequently hear about these types on problems when I am consulted about litigation.

In the best of all worlds, owners and contractors come to me for advice on contracts before they sign them and the work begins. On more than one occasion when a client has brought me on to the team, I have asked everyone to slow it down just a bit, so that we can make sure that everything is in place and that the project is set up in the most favorable way for the owner to have a satisfactory outcome. You can see holes in the relationship when you review the proposed contract. Sometimes the proposed "contract" is just a scope of work with signatures at the end. Taking a little extra time to consult with legal counsel knowledgeable in this area and to have a design professional administer the construction will go a long way towards having a more satisfactory outcome.

C. Jaye Berger, Esq., is the principal of Law Offices C. Jaye Berger, New York, N.Y.




C. Jaye Berger, Law Offices of
C. Jaye Berger