Teer emissions

Dec. 1, 2005

Utility conflicts continue to plague contractors across the country. How DOTs resolve utility conflicts and evaluate, consider and respond to correspondence, time extension requests and claim submittals varies from state to state. Some DOTs seem to think it is not their problem and do little to help avoid the conflict or fairly consider the consequences. In my view this approach creates at best a “win-lose” situation and at worst a “lose-lose” situation. A case decided by the trial court in North Carolina illustrates the problem.

Utility conflicts continue to plague contractors across the country. How DOTs resolve utility conflicts and evaluate, consider and respond to correspondence, time extension requests and claim submittals varies from state to state. Some DOTs seem to think it is not their problem and do little to help avoid the conflict or fairly consider the consequences. In my view this approach creates at best a “win-lose” situation and at worst a “lose-lose” situation. A case decided by the trial court in North Carolina illustrates the problem.

Absolutely unreasonable

The prime contractor, Nello L. Teer Co., entered into an $8,048,488.22 contract with the North Carolina Department of Transportation (NCDOT) to widen a 1.6-mile stretch of U.S. 1 in Raleigh. The special provisions specified work site availability on March 1, 1995, with possible assessment of liquidated damages for failing to meet completion dates of Nov. 1, 1996, for Intermediate Contract Time Number 1 and Dec. 31, 1996, for the overall project.

Teer had a logical plan to build the project and a detailed CPM schedule. Unfortunately, Teer was unable to execute its plan because NCDOT did not assure relocation of overhead and underground utilities prior to the availability date. In addition, NCDOT made numerous construction detail changes and revisions both during the original contract period and as late as 14 months beyond the original schedule.

The utility conflicts were an issue even before the project began and continued to disrupt Teer’s work through 1996. In a pre-construction conference, NCDOT admitted utility relocation was behind schedule. In fact, the last utilities were not relocated until after Dec. 16, 1996. The court found NCDOT failed to have the utilities relocated within any concept of reasonableness. The utility conflicts and numerous revisions made it virtually impossible for Teer to construct the project according to schedule and complete the project within specified contract times.

The court also found NCDOT’s failure to make timely response to Teer’s correspondence, time extension requests and claim submittals to be troublesome. Starting in April 1995, Teer wrote numerous letters requesting NCDOT promptly effect utility relocation. Although not included in Teer’s final claim, it submitted several monetary claims related to the utility conflicts. NCDOT failed to respond to those claims. In fact, NCDOT never responded to Teer’s first formal contract time extension request and the court found NCDOT’s failure to grant that request, and Teer’s many other requests, to be unjustified.

NCDOT’s failure to respond to Teer’s first time extension request prompted Teer to prepare a detailed impact analysis comparing the “as-planned” schedule with the “as-built” schedule reflecting the utility and design change impacts, which substantiated an 84-day contract time extension. NCDOT responded by asking for more information. Teer submitted an additional 31 pages explaining project delays in detail, supplemented by hundreds of schedule pages. Nonetheless, NCDOT never responded further to this time extension request.

Over time, Teer submitted many additional time extension requests. NCDOT failed to respond to any of these requests despite its own “construction manual” provision admonishing NCDOT to take “a reasonable attitude toward requests that are considered equitable and fully justified.” The court noted NCDOT understood Teer’s time extension requests and found them in compliance with the specifications. However, other than granting a seven-day extension due to Hurricane Fran, NCDOT did not expressly grant Teer any time extensions until NCDOT issued its final estimate almost five years after Teer completed the project.

Ultimately, the court found NCDOT’s breach of contract caused Teer to incur substantial monetary damages. The court held NCDOT responsible for failing to relocate conflicting utilities within specified time periods; failing to properly evaluate, consider and grant Teer’s justified time extension requests; wrongfully withholding liquidated damages caused by NCDOT delays; failing to pay the actual quantities for unit-price work; and ordering Teer to redo work at no charge which would not have been necessary but for NCDOT’s defective designs.

About The Author: Parvin’s new firm is the Parvin Law Firm, Dallas

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