I spent last Thursday and Friday at a continuing legal education program offered by the Fidelity & Surety Law Committee of the American Bar Association’s Tort Trial & Insurance Practice Section (“TIPS”) at the Waldorf-Astoria Hotel in Manhattan.
One of the many highlights of the excellent two-day program was a panel discussion on Thursday featuring general counsel and risk managers from five large general contractors: The Walsh Group, Kiewit Corp., Turner Construction Co., Skanska USA and Granite Construction Inc.
During that panel discussion, Mr. Kenneth M. Smith, Assistant General Counsel of Granite, spoke about a topic near and dear to my heart: in-project claims prevention. Mr. Smith spoke about how claims prevention begins with the contract review process, which should feature a thorough identification and analysis of key contract clauses to ensure an appropriate allocation of contract risk between the parties. Legal counsel should follow that review with training of key project staff to ensure that they understand all key contract terms, such as claim notice provisions.
Mr. Smith then spoke about his company’s implementation of monthly impact reports to and/or conference calls with legal counsel to provide a periodic check-up on the health of a project. Are an excessive number of change orders creating a risk of cumulative impact damages? Is the project on budget? If not, in which cost codes can the cost overruns be found? Is the project falling behind schedule? Are there personality conflicts on-site that are preventing effective communication between and among project participants?
The purpose of getting answers to these types of questions on a periodic basis is threefold.