A lawyer discusses contract administration of projects

Slowly but surely we are seeing signs of "life" in the construction industry. I am seeing more and more contracts being negotiated and signed, especially on residential and smaller commercial projects. However, people are still being very careful with their money. You have all heard the expression "penny wise, pound foolish." That is something I am always cautioning my clients to be careful about. People want to put their money into things that they can see-tangible items. This type of thinking causes them to cut back and save money on using architects and interior designers and owner's reps and construction managers to oversee the work. They view their time as an unnecessary expense. No matter how clever you are, no matter how well organized you think you and your staff are, you need to have a team in place to administer the actual construction. Owners wish that they could just hand a set of plans to a contractor and have it turn out exactly the way they are drawn, but that is not the way construction works. Construction is always subject to change. Owners 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 your project the time and attention it needs, it helps to have an independent third-party point this out and help you and legal counsel sort out what to do about it. Some owners take the half way approach. They hire a design professional to observe work on an hourly basis "when requested." 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, when the design professional is only being asked to spend an hour or so once a month. I frequently hear about these types on problems when there is litigation. I am often consulted by owners and developers about their projects. In the best of all worlds, they come to me for advice on contracts before they sign any. However, I am always amazed at the amount of money they are planning to spend on the project and how little money they have allocated to having someone observe the work, answer all the contractor's questions, monitor waivers of mechanic's liens and payment process and to make sure that the proper insurance is being provided with the correct additional insureds. Some people respond by saying, "Well my landlord wants a lot of this paperwork. Isn't that enough?" Not really, since he is making sure that he has the coverage that he needs. He is not making sure that you have the insurance you need. On more than one occasion when a client has brought me onto 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. For example, the contractor may have an architect prepare plans for the owner and pay him out of his fee. That will get the owner a set of plans which are approved and filed with the Department of Buildings, but if there are problems on the project, the owner is missing out by not having a direct contractual relationship with that architect and by not having the professional liability insurance that goes with it. Therefore, 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 an attorney at Law Offices C. Jaye Berger, Manhattan, N.Y.