Lake Michigan flooding and erosion caused tremendous property damage and severe financial loss to owners in 2020. To prevent a repeat in 2021, it is critical to take steps this winter to protect your property before water levels begin their seasonal springtime increase.
For most, this means installing or making improvements to their existing breakwall, seawall or stone barrier walls. Be sure to hire reputable design professionals and contractors who will provide you with the most cost-efficient solutions for protecting your property. Not all contractors are created equal, though, and it’s true that “you get what you pay for.” It is important you implement a qualified bid process to select the best contractors with the optimum solutions for your property.
After selecting your contractor, you will want to make sure your contract sets forth who has the responsibility to obtain the requisite building permits and governmental approvals. Your contract also must contain a clear description of the scope of work for the project. While you may have discussed your goals with your design professional, you will want to ensure the work is accurately reflected in the contract. The contract should include a reference to your detailed project plans and specifications. It also should define the term “work” to include all labor, materials, equipment, services and documentation necessary to construct the project so the contractor does not charge you for any “extra” work.
The contract should provide the location for storage of materials and equipment, and set forth that the contractor will be responsible for providing all sources of utilities, barges, boats, cranes and other equipment required to construct this unique work. It also should establish realistic completion dates. Since timing for completion of the work is critical, liquidated damages and/or success fees should be considered to ensure timely completion of the project.
In addition, your contract must contain the contract price and address the following pricing concerns, including whether:
- The contract price will be paid on a lump sum, unit price, cost of the work plus a fee or guaranteed maximum price basis
- The contract price includes the contractor paying for all general condition costs, taxes, bonds, insurance, permits and other fees, or if the contractor will be reimbursed for such expenses
- The process for reviewing and approving the work before payment is required, which should include the contractor delivering sworn statements and lien waivers as a condition of payment
- The contract price will be paid based on the contractor submitting monthly payment applications with the percentage of work being paid based on a schedule of values or completion of milestones
- A 10% holdback or retention will be required on all monthly progress or milestone payments
Construction projects almost always involve changes, which should be addressed by the parties executing written change orders. If a change order process is not included in your contract, it is highly likely you may end up in a dispute over how to complete the additional work. Such dispute will likely result in costly delays, shutdowns and/or litigation. On the other hand, a detailed change order process will help avoid disputes and will keep your project on schedule for timely completion.
Your erosion control construction contract also should include provisions for insurance coverages, payment and performance bonds, warranties, indemnification and dispute resolution clauses.
The bid process that leads to preparing a request for proposal, or RFP, can be as complicated as the contract itself. Retaining an experienced construction law attorney to help you prepare the RFP and other bid documents will give you more confidence in selecting the best qualified contractor for your project and then negotiating an erosion control construction contract that protects both you and your property. While this is an upfront investment, professional legal help will undoubtedly save money, time and frustration down the road and, potentially, your lakefront home.
Tamara M. Reeves is a litigator at Warner Norcross + Judd LLP who concentrates her practice on commercial real estate and general commercial disputes. She can be reached at firstname.lastname@example.org.