1. MACDC Intercounty Drain Procedures Training
Construction Projects and Contracts
John Brennan
Fahey Schultz Burzych Rhodes PLC
February 15, 2017
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2. Who’s Mistake is it, Anyway?
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
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3. What Contract to use? Size of project will dictate
Work order
Simple contract
Multi-section construction contract
Larger projects: consulting engineer will propose contract form
MDTMB has forms as well
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
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4. Contract review Board should be comfortable with contract form
The more complex, the more legal review is recommended
With input from consultants, board
Sets construction start/completion dates
Determines security and insurance to be provided
Agrees on contract terms and conditions
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
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5. Engineer Project Manager
In large projects, the engineering consultant will represent the drainage board to the contractor
Regular meetings, effective communication are essential
Establish procedures, follow them
Document, document, document!
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

6. Question: How important are change orders to contractors?
Tips: the Change Order
Question: How important are change orders to contractors?
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

7. Answer – You tell me!! macdc.us
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
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8. Change Orders are common
Any alteration to scope of work, time of completion or cost – a change to the contract
Request may be from owner or contractor
Contractor: item of work is beyond scope
Owner: design change (expand or contract)
Contract will have procedure
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
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9. Change Orders in Writing
Must be authorized in writing before the work commences
Often, not the case – verbal with promise that “someone” will put it in writing
Decision making authority should rest in project manager
If true emergency, make immediate written notation and then fully document asap.
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
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10. Change Order Procedure
Demand that contract change order forms be used
Generally: do not authorize new work without written change order
Treat work performed without change order as contract work
Do not establish pattern of waiving written change order policy
Act on requested change orders promptly
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
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11. Denied Change Order Requests
Contracts have claim procedures and dispute resolution procedures
Deadlines adhered to or claim waived
Memorialize, save all communications and supporting documentation (e.g. daily inspection reports)
Protect your fixed-price bid project!
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
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12. Avoiding Change Orders
Too often, needed to fix problems, omissions in original contract
Scope of work not clear
Time pressures – seasonal work
Accepting form contract without review or sufficient tailoring to specific project
Result: verbal directives to modify work in the field
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

13. Tips for Avoiding Disputes
Use best practices for daily inspections and reports
Communicate
Meetings
Follow-up
Require that change orders be signed by both owner and engineer
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
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14. Tips for Avoiding Disputes
When in doubt, address whether proposed work is inside/outside scope of contract first
Describe additional work in detail, including new deadlines, cost adjustment, design changes, etc.
Avoid a change order that permits work on time and material basis
Use technology: record site; send text, or record verbal understanding
Memorialize any verbal communication with a letter promptly
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

15. Decision making
The drainage board should consider pre-authorization for granting change orders up to a determined dollar limit
Not practical to call drainage board meeting for every change order
Designate representative with authority and direct to communicate change orders immediately
Make note and ratify change orders at drainage board meeting
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

16. Tips: Unexpected Physical Conditions
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

17. Soil Conditions, Utilities, Dinosaurs!
Significant problem leading to change order disputes
Contracts often have clauses
Requiring bidder to inspect
Requiring bidder to accept risk for conditions
Are these clauses enforceable?
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

18. Contractor’s Position
Insufficient time to inspect before bids are due
Owner/engineer in better position to determine
Impossible for all bidders to inspect and impractical
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

19. Owner and Engineer’s Position
Bidders can account for contingency in bid
All available technical data is disclosed
Uninsurable risk
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

20. Risk-Shifting Provisions
Enforceable, but not if:
Owner/engineer has relevant knowledge about condition that was not disclosed or indicated in construction plans
Owner/engineer has misled through documents or otherwise
Contractor should not be permitted to allege negligence
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

21. Valentini v. City of Adrian
“The withholding of the city of its knowledge of the conditions, resulting in excessive cost of constructions, forms an actionable basis for … damages.”
Contractor was permitted to recover for unforeseen condition even where contract placed burden of inspection on contractor, because owner withheld knowledge about condition.
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

22. Valentini v. City of Adrian
Justice Edwards’ Concurrence: “We should not extend the present Michigan rule to all a successful low bidder to transform his fixed-price bid into a cost-plus contract by the simple expedient of proving that conditions which he encountered below the surface of the ground had been there all along and that somebody at some time knew of them or had reason to suspect their existence.”
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

23. P.A. 57 of 1998
Requires provision in all public contracts greater than $75,000
Contractor discovers
Subsurface/latent physical condition differing materially from those indicated in contract; OR
Unknown physical condition unusual in nature differing materially from that ordinarily encountered and generally recognized as inhering in type of work in contract
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

24. P.A. 57 of 1998
MUST notify drainage district before disturbing the condition in writing
Drainage district investigates
Drainage district determines whether “materially different”
Either accepts and executes change order for “equitable adjustment”
Denies and contractor files a claim
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

25. P.A. 57 of 1998
Contractor may not file a claim for equitable adjustment if
Does not comply with notice requirement (so cannot disturb the condition); or
Contractor has received final payment under contract (e.g., request is denied and no claim is filed)
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

26. P.A. 57 of 1998
Question: In the case of utilities that appear to be in conflict with construction plans after Miss Digg staking, will this provision apply to require an equitable adjustment for the contractor?
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

27. P.A. 57 of 1998 Answer: It Depends. macdc.us
Generally, local units of government are immune from liability for injuries to persons or damages to real property. The Governmental Immunity Act (MCL et seq.) provides general immunity, but also lays out certain narrow exceptions. One exception—known as a Public Act 222
In practice, however, many claims under Public Act 222 of 2001 (“PA 222”) are filed seeking compensation for flooding damages following a heavy rain event. Claim—is intended to hold governmental units liable for injuries or damages relating to a sewage disposal system (including storm water system) back up or overflow under limited circumstances.
macdc.us

28. Questions?
John Brennan Fahey Schultz Burzych Rhodes PLC 4151 Okemos Road, Okemos, MI Tel: (517) Website:
macdc.us