Failure to provide proper notice in accordance with the terms of the contract. The impact could be catastrophic to your company.
Upon award of a project, review your contract and prepare a list of notice requirements by subject noting the time frame for giving notice, to whom notice must be given, and how the notice must be given. Consider including the consequences of failing to provide timely notice for each subject as a reminder or motivator for you or your employee to comply. Consider specifically assigning the duty to all of your staff to review the contract and identify all notice provisions, report them back to your team leader. It is important that all employees that can first become aware of an issue become thoroughly familiar with the contractual notice requirements. Finally, implement a plan for reviewing all such notice requirements, training all employees on formal notice, and develop procedures for proving that notice was given properly and timely; and maintain the records of having done so.
Imagine, a simple failure to deliver a written notice could cost you millions of dollars. Your prime construction contract with the owner or developer, or your subcontract from the general contractor has throughout it provisions that in certain circumstances require you to provide written notice to particular parties within a certain number of days, and often the contract says you WAIVE YOUR RIGHTS TO CLAIM MORE MONEY OR TIME TO PERFORM when you fail to provide this written notice. Commonly notice is required for claims related to unknown conditions encountered in the field, when field measurements do not match the construction drawings, when a problem with the drawings themselves are discovered. These contracts often make you responsible for things that have nothing to do with you except for a failure to put notice of the problem into the proper form and sent to the proper persons.
As a lawyer, I have seen clients come to me after an issue has escalated from a simple matter expected to be resolved to a full-blown project-stopping impending major litigation. One small problem escalates and timely and proper notice of the issue was not given; now you may have no recourse or remedy.
Does this process sound familiar? The superintendent knew about an issue in the field, spoke to various on site project representatives, on a good day that may include an owner’s rep, the architect, and an appropriate subcontractor. Often the superintendent will even send en email to his project contacts. After a week or two of regular discussions, reminders and emails, the problem is reported to a project manager, supervisor or owner. Ultimately, someone, perhaps your construction lawyer, refers to the contract terms to see that the company has 5 days to provide written notice, by mail or hand delivery to the Owner and Architect is required. Even if the issue was brought it to everyone’s attention in a weekly meeting, or at a monthly owner meeting, you could very well be left holding the bag and footing the bill for a major change. You could be in for a prolonged battle, withholding of funds, and legal costs. But at the very least, your business relations and reputation with the owner, architect and others can be impacted and that affects your bottom line every time.