The maintaining and retaining of project documents and data is critical, following these measures can help prevent potential litigation.

The importance of maintaining and retaining project documents and data cannot be overstated. These measures can prevent issues from arising and provide evidence to prosecute or defend future litigation.

Before the Project

In order to have an effective and manageable document management system, it is important to anticipate what parties and documents will be involved. Parties may include owners/developers, architects, engineers, general contractors, subcontractors, suppliers, inspectors, lenders and others. Relevant documents may include contracts/agreements, plans and specifications, drawings, schedules, insurance policies/programs, notices, progress/inspection reports, draw requests and pay applications, change orders, permitting, code compliance and occupancy documentation, as well as communications.

Such is the backdrop against which selection and implementation of a viable data management system is set. Some parties may have tried and true systems, other systems may be in need of improvement or replacement, but there are constant advancements. An effective system involves real-time project management, integration with other systems, mobile/field access, document input and access ease, organization, user-friendliness, security, flexibility and upgradability. There is no “one size fits all,” so consider those aspects most important to your role and business in identifying the desired system.

Sharing electronic information has become of such vitality to project success that AIA has updated versions of its E203 form – Building Information Modeling and Digital Data. The stated purpose is establishment of party expectations for use of digital data and building information modeling on the project and development of processes for detailed protocols and procedures for development, use, and exchange of digital data and BIM. Whether you utilize the E203 or some other agreement, it is important to have an efficient and workable solution.

During the Project

Even the most well thought out document policies can fall by the wayside during a project. Consider periodic audits to ensure key safety and progress information is maintained. Safety materials may include orientation signoffs, drug test confirmations, injury reports and corrective actions, and pre-work assessments. Pre-work assessments identity safety risks and steps to address them. It is helpful to document project progress in chronological fashion, including meeting notes, on-site reports (photographs, weather conditions and progress notes), requests for information and responses, schedule updates and critical path, change order records, applications and certifications for contractor payments.

After the Project

Issues may arise following project completion that require quick identification and access of project documentation. Claims for construction defects that manifest after completion arise often, and the focus becomes on what, who and when as the defect’s source. Worker injury or other damage claims may also be asserted following completion. Such claims can necessitate identifying agreements for notice, indemnification and pertinent insurance policies, and project designs and plans. Liens may be filed/recorded that necessitate identifying bonds or releases. Retainage and delay claims may be asserted, which require accessing financial information, claim releases and project schedule, and progress and completion documentation. Warranty claims may also arise after project completion, which necessitate review of warranties, punch lists, substantial completion dates and other pertinent documents. As such, it is as important to have effective identification and access to documentation after completion as during the project.

Because of potential post-project claims, well-executed document retention policies are critical. Retention policies should: (1) be in writing; (2) designate personnel charged with compliance; (3) be reviewed periodically to ensure compliance with industry standards and laws; and (4) designate an appropriate retention period. The time limits in which construction claims can be filed varies depending on state statutes of limitations and statutes of repose. Generally, a statute of limitation begins to run after a party discovers or should have reasonably known of its injury (in a defect case, this may be quite some time after the project is completed). A statute of repose immunizes a party from liability after a set period has expired from completion, regardless of when the injury was discovered.

Parties should therefore review the choice of law provision in project agreements to determine which laws apply and design their retention policy accordingly. You may keep certain records for longer to shore up institutional knowledge and based on other business considerations. Of course, once a party becomes aware of threatened litigation, it should consult with its counsel to implement a “litigation hold” meant to preserve documents relevant to the project at issue.

In summary, implementing a user-friendly document management system and ensuring it is complied with before, during and after the project can help to avoid many of the he-said, she-said scenarios that occur during litigation.

Melanie Chico (mchico@dykema.com), member at Dykema’s Chicago office, concentrates her practice on complex business and commercial litigation matters. She has extensive litigating experience in both the real estate and automotive industries. 

Brett Schouest (BSchouest@dykema.com), member at Dykema’s San Antonio office, is a commercial litigator experienced in financial services litigation and business disputes. His emphasis is on litigation concerning consumer financial services disputes, insurance coverage, construction, real estate, financial transactions, computer technology, business contract and tort disputes and business owner/officer issues.

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