An Administrator's Guide to California Private School Law

Chapter 17 – Construction

B. D ISPUTES W ITH C ONTRACTOR D URING C ONSTRUCTION

1. I NITIAL A NALYSIS When disputes with a contractor occur during construction of a project, the school’s first step should be to conduct an initial analysis of the status of the project and the nature of the disputes. Please see the Compendium for a list of factors that schools should consider when conducting this initial analysis. Next, the school should review and understand its rights and the contractor’s duties in the contract documents and the performance bond. Third, in consultation and coordination with the architect, inspector of record, project or construction manager, and legal counsel, the school should evaluate its options and risks in light of the initial analysis. Finally, the school should take effective actions to resolve the disputes. 2. O PTIONS F OR R ESOLVING D ISPUTES W ITH C ONTRACTOR The contract documents and performance bond generally establish the school’s options if the disputes with the contractor do not resolve and rise to the level of contractor default on the project. The following options are typical, although each situation must be evaluated on a case- by-case basis: a. Continue With Contractor

 Pursue this option if the contractor can finish the project and the school can wait to resolve the dispute. The school may levy liquidated damages and implement other withholdings of payment as permitted by the contract documents. The school should consult with legal counsel before requiring the contractor to “accelerate” work on the project as this may allow the contractor to recover the cost associated with such acceleration.  If the project is near completion, consider deleting part of the work from the project. The construction contract documents should contain a provision establishing that the school may remove any scope of work from the project at its own discretion. The school can complete the work itself and may be able to levy back charges for the work as appropriate.  The school may work with the surety to encourage the contractor to complete the project. Schools should consult with legal counsel before contacting the surety because contacting the surety may expose the school to certain risks or claims from the contractor.  Consider whether demanding removal of one of the contractor’s employees will solve the problem. Typically, a contract provision will permit the school to make this demand.  Determine whether the school can utilize joint checks with the contractor to pay subcontractors to complete the work. A contract provision, or consent of the contractor, preferably in writing, is generally required before the school can issue joint checks.

An Administrator’s Guide to California Private School Law ©2019 Liebert Cassidy Whitmore 580