State of the Construction Defect Industry · 10/12/2017 · Defect Industry: What's the Same and What's New." Pete Fowler Construction Services, Inc. has been talking, presenting

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State of the Construction Defect Industry:

What’s the Same

& What’s New

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State of the Construction Defect Industry: What’s the Same

and What’s New

INTRODUCTION

On October 19th, 2017 at 10:00am, Alex Prokop and Pete Fowler will present a FREE webinar called "State of the Construction Defect Industry: What's the Same and What's New."

Pete Fowler Construction Services, Inc. has been talking, presenting and writing about construction defects (CD) and CD litigation for a long time. In 2011, we presented a program called The Construction Defect Lifecycle. Lots has happened since then. So, we’re back to present "State of the Construction Defect Industry: What's the Same and What's New."

PROGRAM OUTLINE

1. Introduction 2. Where Have We Been? 3. What’s the Same? 4. What’s New? 5. Where Are We Going? 6. How Do We Get There? 7. Conclusion

LEARNING OBJECTIVES

• Introduction to Construction Defects (CD) and the strange world of CD Litigation.

• Review the history of the CD industry. • Understand building performance

standards, investigation practices, and how they relate to Construction Defects.

• Explore where the industry is headed and how we're going to get there.

BACK-UP MATERIALS

1. Common Construction Defects 2. Portfolio Management of Construction

Claims

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State of the Construction Defect Industry: What’s the Same & What’s New Program Outline

PROGRAM CONTENTS

1. Introduction A. Presenter Information B. Webinar Materials C. CE Certificates D. Feedback E. Learning Objectives F. Program Introduction

2. Where Have We Been? A. Common Construction Defects B. The Construction Defect Lifecycle C. Aluminum Windows & Other

Products D. The Great Recession of 2008

3. What’s the Same? A. Plaintiff Attorneys B. Windows C. Defense Attorneys & Litigation D. Construction Defect Model E. Portfolio Management of

Construction Claims 4. What’s New?

A. Drained Walls B. Wrap Insurance Policies C. Building Codes D. CD Litigation E. Better Design & QC F. Economy G. Leaking Buildings H. Class Action Litigation I. Commercial Buildings & Public

Work 5. Where Are We Going?

A. Better Buildings B. Building Information Modeling

(BIM) C. Industry D. Windows E. Defects F. Labor

6. How Do We Get There? A. ABC’s of Risk Management B. Continuous Improvement C. Deep Thoughts D. Welcome to the Future

7. Conclusion A. Learning Objectives B. Program Outline C. Back-Up Materials D. Webinar Materials E. CE Certificates F. Feedback/Survey

10/12/2017

1

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State of the Construction Defect Industry:

What’s the Same & What’s New

October 19th, 2017

10/12/2017

2

Read about industry impacts on our blog at www.petefowler.com

PFCS: We Know Buildings

1. INTRODUCTION

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SOLUTIONS

We specialize in creating REAL PRACTICAL SOLUTIONS that help our clients spend the right amount, on the right work, at the right time.

PFCS: Who We Are1. INTRODUCTION

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10/12/2017

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CLIENTS

• Property Owners & Managers

• Builders & Developers

• Contractors

• Product Manufacturers

• Insurers

• Lawyers

PFCS: We Know Buildings1. INTRODUCTION

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Manage / Allocate

Specify

EvaluateCollect

Project Plan Objective

Level 1 Preliminary Investigation

Level 2 Analysis

Level 3 Reports and Costs

Level 4 Testimony

Level 5 Resolution

The PFCS Way

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The PFCS Way: SOLUTIONS• EXPERTISE: Technical experts who are focused on real practical solutions is

surprisingly hard to find. We found them. And we work to keep that focus.

• PROJECT MANAGEMENT: To deliver valuable work with measurable return on investment (ROI), we have to manage the Scope, Budget and Schedule of our work.

• TECHNOLOGY: We use proprietary technology to create valuable work faster, better and cheaper, to make the information available to all applicable stakeholders, and to create a permanent digital record at no extra cost.

• STANDARDS: To help clients manage building lifecycle performance and costs, we compare each project to industry standards and best practices, then apply professional judgment to develop strategies and step-by-step plans for maximizing ROI for maintenance and repair expenditures.

1. INTRODUCTION


PFCS Services

1. INTRODUCTION

• Construction Defect Litigation (Also see BLM)

• General (Property) Liability Claims

• Construction Accidents

• Traditional Claims related to contracts, payments, performance, change orders and delays

• Building Inspection, Testing and Property Assessment

• Specifications for Building Maintenance and Repairs

• Construction Budgets and Cost Estimating

• Construction Management

• Quality Assurance Plans and Inspections

CLAIMS & LITIGATION BUILDING LIFECYCLE

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ON ALL PROJECTS BLM OR LITIGATION?

Manage Quality: We apply professional construction management discipline to get work done, and create and execute construction quality assurance plans.

Allocate Responsibility: For insurance and legal clients we use our expertise in evaluating, specifying and managing construction to compare what happened in problem projects to what should have. We apply professional judgment to allocate responsibility.

Building Information Management: We pick up where Zillow and Google leave off. We use technology to collect, organize, structure and store documents and building info forever.

Evaluate Performance: We perform structured building inspection and testing evaluations, exceeding the highest standards.

Specify Solutions: We analyze, report, make recommendations and compose specifications and estimates for construction, maintenance & repairs.

The PFCS Way


Program Outline

1. Introduction

2. Where Have We Been?

3. What’s the Same?

4. What’s New?

5. Where Are We Going?

6. How Do We Get There?

7. Conclusion

1. INTRODUCTION

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1. INTRODUCTION


Introduction

• Presenter Information

• Webinar Materials

• CE Certificates

• Feedback

• Learning Objectives

• Program Introduction

1. INTRODUCTION

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Alex Prokop

CONNECT WITH ALEX

Call 949.240.9971 or 503.660.8670

Email [email protected]

Find him on LinkedIn!


Pete Fowler

CONNECT WITH PETE

Call 949.240.9971 or 503.660.8670

Email [email protected]

Find him on LinkedIn!


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10/12/2017

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Webinar Materials

1. INTRODUCTION

Click on the seminar you attended


1. INTRODUCTION

CE CERTIFICATES WILL BE SENT OUT WITHIN 3

BUSINESS DAYS

(There is no need to contact us, Certificates of Attendance are sent to all who logged in for the seminar).

10/12/2017

9


SURVEY SAYS!

Your Feedback is Important1. INTRODUCTION

You will receive a survey link immediately following the webinar. We put a lot of effort into providing these programs free of charge, we just ask that you take a few seconds to leave your feedback on today’s presentation


Learning Objectives


• Review the history of the CD industry.

• Understand building performance standards, investigation practices, and how they relate to Construction Defects.


1. INTRODUCTION

10/12/2017

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Program IntroductionWHY THIS IS IMPORTANT

• Pete Fowler Construction Services, Inc. has been talking, presenting and writing about construction defects (CD) and CD litigation for a long time.

• In 2011 Pete and Alex presented a program called The Construction Defect Lifecycle. Much has happened since then.

• Pete and Alex are back to present "State of the Construction Defect Industry: What's the Same and What's New

1. INTRODUCTION

2. WHERE HAVE WE BEEN?

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Where Have We Been?

• Common Construction Defects

• The Construction Defect Lifecycle

• Aluminum Windows & Other Products

• The Great Recession of 2008



Common Construction Defects


Journal of Light Construction, Pub. October 1998

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CD Lifecycle


• Plan

• Build

• Use

• Dispute

• Repair

• Learn


Windows 2. WHERE HAVE WE BEEN?

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The Great Recession



CD Lifecycle


Construction Defects Lifecycle Program 2011

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3. WHAT’S THE SAME?


What’s the Same

• Plaintiff Attorneys

• Windows

• Defense Attorneys & Litigation

• Construction Defect Model

• Portfolio Management of Construction Claims


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Plaintiff Attorneys


✓ Assertive

✓ Entrepreneurial


Windows


• Still a major target

• Windows being installed in exposures where they can't handle it

• Lack of focus of protecting windows in harsh climates

• If there's a plain vanilla CD case, windows are the issue, or at least have been investigated.

• “If you build it, they will try to make it leak”

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Defense Attorneys & Litigation



Construction Defect Model


Relatively Unchanged

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Portfolio Management of Construction Claims


• Claims Management Plan

• Company Level Analysis

• Project Level Analysis

• Vendor Scope-Budget Matrix

• Meeting Minutes

4. WHAT’S NEW?

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What’s New?

• Drained Walls

• Wrap Insurance Policies

• Building Codes

• CD Litigation

• Better Design & QC

• Economy

• Leaking Buildings

• Class Action Litigation

• Commercial Buildings & Public Work

4. WHAT’S NEW?


Drained Walls

4. WHAT’S NEW?

People are actually paying attention to the details. Including the authors of the code.

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Wrap Insurance Policies

4. WHAT’S NEW?


Building Codes

4. WHAT’S NEW?

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CD Litigation

4. WHAT’S NEW?

• Business isn't as big as it was, less litigation in general.

• Different companies have very different strategies for handling litigation - it used to be more transactional.


Design & QC

4. WHAT’S NEW?

• Builders are smarter

• Independent QC is pervasive

• There are still dumb-a$$es

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The Economy

4. WHAT’S NEW?


Leaking Buildings

4. WHAT’S NEW?

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Class Action Litigation

4. WHAT’S NEW?


Commercial Buildings & Public Work

4. WHAT’S NEW?

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5. WHERE ARE WE GOING?


Where Are We Going?

• Better Buildings

• Building Information Modeling (BIM)

• Industry

• Windows

• Defects

• Labor


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Better Buildings

Quality is improving in all aspects of the modern economy

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Building Information Modeling


Windows


As an industry, where are we going?

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Defects



Labor


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6. HOW DO WE GET THERE?


How Do We Get There?

• ABC’s of Risk Management

• Continuous Improvement

• Building Industry

• Deep Thoughts

• Welcome to the Future


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ABC’s of Risk Management



Continuous Improvement


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Building Industry



Deep Thoughts

6. PRESENTING

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7. CONCLUSION


Conclusion

• Learning Objectives

• Program Outline

• Back-Up Materials

• Webinar Materials/CE Certificates

• Feedback

7. CONCLUSION

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Learning Objectives


• Review the history of the CD industry.

• Understand building performance standards, investigation practices, and how they relate to Construction Defects.


7. CONCLUSION


Program Outline

1. Introduction

2. Where Have We Been?

3. What’s the Same?

4. What’s New?

5. Where Are We Going?

6. How Do We Get There?

7. Conclusion

7. CONCLUSION

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Backup Materials

1. CD Lifecycle 2011

2. Portfolio Management

7. CONCLUSION


Webinar Materials

7. CONCLUSION

Click on the seminar you attended

10/12/2017

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CE CERTIFICATES WILL BE SENT OUT WITHIN 3

BUSINESS DAYS

(There is no need to contact us, Certificates of Attendance are sent to all who logged in for the seminar).

7. CONCLUSION


SURVEY SAYS!

Your Feedback is Important

You will receive a survey link immediately following the webinar. We put a lot of effort into providing these programs free of charge, we just ask that you take a few seconds to leave your feedback on today’s presentation

7. CONCLUSION

10/12/2017

34

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Join us for our next WEBINAR:Construction Contracts,

Risks & InsuranceThursday, November 9, 2017

10:00 am PST

Since the early 1990s, the SouthernCalifornia building industry has beenengulfed in a bitter fight. Spawned by sub-standard construction during the region’s

1980s building boom, construction defect litiga-tion has become a full-fledged “industry,”with many architects,

engineers, and former building contractors nowworking full time at construction defect consult-ing. Attorneys, acting as advocates for homeown-ers, hire these experts in the effort to prove thatshoddy workmanship is causing new homes torapidly deteriorate. Meanwhile, the home build-ing industry, put on the defensive, is claimingthat the real problem is unscrupulous attorneyswho are feeding off the media coverage andexploiting the legal system. The reality is probablysomewhere in between. Regardless, residentialconstruction in Southern California has never

Common Construction

Defects

by Pete Fowler

A guided tour through some of the most common errors and omissions fueling the litigation frenzy in the

California building industryOCTOBER JLC 1998

Common Construction

Defects

been so thoroughly scrutinized.As a licensed GC and construction

consultant, I wanted to see for myselfthe kinds of problems that were beinguncovered. After reviewing more than20 typical repair estimates from past andcurrent construction litigation cases, Icompiled a list of the kinds of defectsthat appeared most often (see “MostCommon Defects”). The purpose of thisarticle is not to cover every possibledefect, but to illustrate some of the mostcommon ones that I see. In most cases,the cost of doing the job right in the firstplace is far less than any corrective mea-sure. And if you happen to build in anarea where defect litigation is rampant,keep in mind that a seemingly minorsurface defect could — given anunhappy client — result in an inspec-tion of your job that turns up all sorts ofcode violations that had previously goneunnoticed.

Structural & Framing DefectsOnce an inspection gets rolling for

some other reason, framing and struc-tural problems are almost alwaysuncovered.

Most of Southern California is locatedin the most severe seismic zone, meaningmost homes are designed by engineers.The builder must strictly follow the engi-neer’s specifications, otherwise the con-struction can be considered defective —even if there is no manifest damage.

Diaphragms and Shear WallsFailure to follow the nailing require-

ments for shear walls and diaphragms isa common defect. Many builders tem-porarily set the plywood in place with afew hand-driven nails, then return laterto finish the nailing with a gun.Unfortunately, we sometimes find thatthe second step in the process has beenforgotten and the finish materials areinstalled over inadequately attached ply-wood. Another typical mistake is thesubstitution of box nails or sinkers forthe specified common nails, or use of asmaller size nail. Figure 1 shows anexample of just plain sloppy nailing.

OCTOBER JLC 1998

Figure 1. Nails that miss thetruss — a result of sloppywork with a pneumaticnailer — void the strengthof the roof diaphragm.

Figure 2. The plywood on this interior shear wall should have been carried all the way tothe roof diaphragm.

Figure 3. This shear plywood falls short of the shear wall posts on the right and left, and isattached with too few nails.

A more subtle but common problem isfailure to carry an interior shear wall allthe way to the roof diaphragm (Figure 2).This vertical continuity is necessary forthe shear wall to transfer lateral forcesfrom the roof diaphragm down to thefoundation.

Sometimes the shear plywood doesnot extend across the entire width of theshear wall area and thus doesn’t reachthe post and hold-down that make thesystem complete (Figure 3). Other timesthe plywood reaches only the bottom ofthe two top plates (Figure 4), interrupt-ing vertical continuity at the criticalconnection between the top of the shearwall and the floor or roof diaphragmabove. This can happen when the ply-wood is installed while walls are framedon the deck and the double top plate isnot yet in place. A simple fix is to installa Simpson A35F (flat) or similar metalconnector, but the process is mademore difficult because finishes must beremoved or the work must be per-formed in a tight attic space.

Connector ProblemsAnother common mistake occurs

when the hold-downs are attached tothe wrong members, creating a shortershear wall than the plans called for. Thisis important because the uplift load onthe hold-downs increases exponentiallyas the hold-downs get closer together.When hold-downs are placed too closetogether, the uplift loads will exceed thehold-down’s capacity, creating thepotential for catastrophic failure in anearthquake or hurricane (Figure 5).

Improper installation of joist andbeam hangers is also quite common(Figure 6). These metal connectors fre-quently have missing nails and are oftenfound mangled and twisted out ofshape, having been cut or bent to fit anapplication never intended by the man-ufacturer or structural designer.

As with most structural defects, therepair is simple if the area is accessible.Unfortunately, all too often the repairinvolves removing expensive finishes toaccess the framing.

OCTOBER JLC 1998

Figure 4. This shear plywood should have extended to the top of the double top plate — amistake that can be remedied with the addition of metal connectors across the two plates.

Figure 5. These shearwall hold-downs aretoo close together,making the shearwall practically use-less in resisting over-turning forces.

Figure 6. An inspection made through a hole cut in the ceiling reveals that the joist hangerat left is bent and missing nails.

RoofingAlong with leaky windows, roofing

problems are at the root of more con-struction litigation in SouthernCalifornia than any other defect. Everyroof detail — hips, valleys, ridges, therake, the eaves, head walls, and so forth— is a potential problem area. Leaks atpenetrations are common. Often theroofing felt is not extended over the topof the base flashing in weather-boardfashion or is not extended far enough.Sometimes the base flashing is installedwith roofing mastic as the primarywater-shedding mechanism. The masticwill usually not last for the entire lifeexpectancy of the roof; in fact, it oftenfails soon after installation.

Rake & Eaves DetailsOne of the most common mistakes I

see is the failure of the roofer to turndown the 30-lb. felt underlayment tocover the edge of the decking at therake. Instead, the felt is cut flush withthe top edge of the roof sheathing orbarge rafter. Any water that makes itsway past the rake tiles has an easy pathonto the wood deck (Figure 7).Unfortunately, like most roofingdefects, this cannot be readily inspectedon a completed roof because the raketiles cover the edge of the roof.

Another common mistake involves astandard tile roof detail: the raised fasciaboard. The detail is acceptable, butaccommodation must be made for thevoid that is created behind the fasciaboard by installing a sheet metal flash-ing or other anti-ponding device. Manyroofing contractors omit this flashing,and the underlayment soon begins tosag and pond water, which makes itsway behind the fascia and into the eaves(Figure 8).

WindowsThere seems to be a problem in the

minds of some window installers andother subs whose work interacts withwindow flashing: The fundamental con-cept that water runs down hill has notbeen firmly established. Keeping this

OCTOBER JLC 1998

Figure 7. Instead of foldingdown over the edge, the feltpaper on this rake overhangwas cut flush with the topof the sheathing, allowingrain water to wet the sur-face of the roof deck.

Figure 8. A raised fasciaboard (illustration) requiresa heavy metal flashing orcant strip to ensure thatrunoff passes over the edge.Otherwise, water willpond, as in the photo,resulting in leaks and rot inthe eaves.

Underlayment

Metal flashing or cant strip

Raised fascia board

Raised Fascia Flashing

theory in mind is the surest resolutionto the majority of both window androofing leaks.

A classic problem is the “reverse lap”at the sill flashing paper, which shouldlap over the building paper below. Thekraft flashing paper is put on first andthe building paper is then lapped over(Figure 9). This allows water to easilyenter the interior of the building enve-lope once it passes the exterior finish.Occasionally I’ll see an instance where aworker made an effort to get the build-ing paper under the sill flashing paperbut failed to detail the corner junctioncorrectly (Figure 10). These mistakes canbe repaired only by removing the exte-rior finish and reinstalling the buildingpaper to properly integrate with the win-dow flashing paper.

Painting Wood WindowsWood windows are the exception in

Southern California construction (mostare aluminum), which may be the reasonthey are often not protected adequatelyfrom the harmful effects of moisture andtemperature extremes. Although mostwood windows come with an exteriorprimer from the factory, all componentsand all edges should be painted as soonas possible. When wood windows are notproperly painted on all surfaces, theunfinished surfaces will take on moistureat a higher rate than the painted areas,creating uneven expansion and contrac-tion and the possibility of rot (Figure 11).A common manifestation of damage iswhen the windows fail to operate prop-erly, especially after swift changes in theweather.

Poorly Flashed Penetrations in Stucco

Stucco is the most popular exteriorfinish in Southern California, andbecause of this, most water intrusionissues, with the exception of roof leaks,are inevitably associated with stucco insome way. As with window installation,the areas where another trade mustinteract with the stucco are the source ofmost of the problems.

OCTOBER JLC 1998

Figure 9. The building paper below a window must be tucked below the flashing paper —a detail often botched, as in the top photo. Above is a reverse lap seen from the inside ofthe wall cavity.

The chart lists the top ten defect items, ranked by the number of instances cited in therepair estimates reviewed by the author. The number in the right-hand column is the aver-age percentage by item of the total estimated cost.

Most Common Defects

Rank by No. Defect Avg. % ofof Instances Description Total Estimate

1 Structural/Rough Carpentry 14.7%

2 Roofing 8.4%

3 Windows 7.8%

4 Plumbing 5.4%

5 HVAC 2.9%

6 Lath & Plaster (Stucco) 3.5%

7 Fireplaces & Chimneys 0.9%

8 Waterproof Decks 3.4%

9 Fire-Resistive Assemblies 7.5%

10 Civil/Site Drainage/Fine Grading 5.6%

There is a remarkable shortage ofdetailed information regarding the flash-ing and intersection details that cause somany of the problems encountered inconstruction defect litigation. Mostinstallation specifications and code doc-uments make general statements aboutthe application of plaster or propercement mixes but do not make detailedrecommendations for waterproofingpenetrations other than windows, eventhough they plainly state that “stuccoplaster should not be considered water-proof.”

A condition that frequently results infailure is where a deck handrail or can-tilevered joist passes through the stuccoskin to the framing below (Figure 12).These intersections are difficult to flashand the necessary coordination betweenthe trades is usually lacking. The bestidea is to avoid these protrusions alto-gether. Instead, frame the deck with fourposts from the ground and stop thehandrail shy of the building.

Buried Weep ScreedBecause a traditional stucco exterior is

not “waterproof,” some accommodationmust be made to allow moisture toescape. The Uniform Building Code man-dates the installation of a galvanized steelweep screed at the base of the wall (Figure13). The screed is nailed to the sill plate,and its upper leg is covered by the build-ing paper. This creates a neat and cleantermination for the plaster in addition toallowing the escape of moisture that hasfound its way behind the stucco.

Unfortunately, all too often thescreed is buried behind a patio slab orconcrete walk that gets installed afterthe stucco contractor has left — again,a problem in coordination and plan-ning. When this happens, moisturecan’t escape, causing the stucco to dete-riorate and frequently leading to rot inthe sheathing and framing.

Stucco CracksStucco cracking is one of the most

common homeowner complaints(Figure 14). In part, this is a matter of

OCTOBER JLC 1998

Figure 12. Framing protrusions, such as handrails (left) and cantilevered joists (right), aredifficult to flash properly, inevitably leading to moisture intrusion, cracked stucco, anddecay in the structure below.

Figure 11. Wood windows should be painted on all raw wood surfaces. Otherwise, theywill pick up excessive moisture (as the moisture meter reading in the photo at right shows),causing them to swell or even rot.

Figure 10. Here, the build-ing paper is installed underthe flashing paper at the bot-tom of the window, but noton the side — leaving a vul-nerable corner where theflashing paper has been cut.

education: Homeowners should be toldto expect minor surface cracks as thestucco shrinks. But it’s also a matter ofworkmanship. Many cracks could beavoided by paying attention to controljoints, proper attachment of lath, allow-ing enough time between coats, andmoist curing.

Some industry experts recommendthat any cracks 1/32 inch or wider shouldget some type of aesthetic repair, espe-cially in smooth finished stucco. On theother hand, NAHB’s manual, QualityStandards for the Professional Remodeler,allows a gaping 1/8 inch. Whatever yourstandard, it’s best to be up front with theclient and establish realistic expecta-tions early in the process.

The repairs for nonstructural stuccocracks might involve applying Thuro-lastic knife-grade filler and a stucco fogcoat over the entire wall plane, using abrush-on elastomeric sealant featheredto match, or dusting in a matching colorcoat and allowing the moist night air to cure it.

Waterproof Deck ProblemsWaterproof decks are only eighth on

the list of defects, probably becausethey’re not found in every residence. Butwhenever I find them on 1980s mass-produced housing that’s involved in liti-gation (including condos and single-family tracts), these decks seem to alwayshave problems. Many builders have real-ized the practical difficulty of waterproof-ing this type of construction, and arenow avoiding it altogether. If you con-tinue to build waterproof decks, includeas few penetrations as possible andstrictly follow the decking manufacturer’sinstallation directions.

The photo on shows a poorly flashedpost penetration. The unsealed flashingacted more like a funnel, sending thewater right into the framing and keep-ing it there, where it could do the kindof damage evident in Figure 15.Ponding of water on waterproof decks isanother common problem (Figure 16),which can also lead to rot in the struc-ture below.

OCTOBER JLC 1998

Figure 14. Stucco cracking isone of the most common cus-tomer complaints. Tight surfacecracks are normal in stucco andcan usually be repaired. Withquality workmanship, largercracks can be avoided.

Figure 13. The stucco at the bottom of this wall (photo, top) should have terminated witha weep screed above grade rather than being buried behind an outdoor patio slab.

Moisture, unable to drain, wicks intostucco and framing

4" min.

Installing a Weep ScreedWrong Right

Plumbing DefectsMany of the defects discussed thus far

involve exterior water sources. Plumbingdefects bring that water source insidethe house, with equally serious conse-quences. Some of the plumbing defects Isee are more in the way of nuisance orcode violations, like water hammer,excessive water pressure, or loose showerarms. These typically don’t involvestructural damage from leaks.

A common source for a plumbing leakis a poorly installed toilet (Figure 17).The connection to the closet flange isimportant because the toilet receives somuch use, which includes supportingthe entire body weight of the user. If thetoilet has not been set level, or if theflange is too high or low in relation tothe finish floor, it’s only a matter of timebefore a leak develops. A leaky toiletoften goes unnoticed for some time,since the water may leak under the fin-ish flooring directly into the framing.

Chipped SinksThis is a manufacturing defect plain

and simple — and one that tends to behighly visible and irritating to owners(Figure 18). Although it’s not a structuralconcern, if condo owners or tract housedwellers notice this in one another’shomes, it can help start the defect litiga-tion ball rolling. The chipping is nor-mally located at the spot welds in thesinks. The enamel doesn’t stick well tothe welds and easily chips away, some-times in a pattern. The solution is not tobuy cheap sinks from manufacturers youhave not heard of.

Ponding in Bath TubsPonding in a tub may be a manufac-

turing problem but more often stemsfrom improper installation (Figure 19).The builder needs to take the time tocheck the framing, and shim and levelthe tub as necessary. Otherwise, waterwill collect and may stain the unit.Again, this is not a life or death issue,but it’s one that homeowners will easilysee. The cure for this defect, some mightargue, is more painful than the disease:

OCTOBER JLC 1998

Figure 17. If hidden by fin-ish surfaces, a leaky toiletconnection can go unde-tected until structuraldecay sets in.

Figure 16. Besides ruining the finish surface, ponding on waterproof decks also leads todeterioration of the framing below.

Figure 15. Because waterproof decks are difficult to detail properly, rotting substructure isa common defect.

Remove the tub and reinstall it correctly— which usually involves removal andreplacement of ceramic tile surrounds.

Hvac IssuesAs with plumbing, many of the hvac

defects cited in a typical defect case arenuisance and code issues that are easy tocorrect, like construction debris in thereturn air plenum, unsecured units, andno trap vent on the condensate drain.These issues rarely cause serious ownerdissatisfaction. Pinched or crushed ductsare another common problem (Figure20), which can cause uneven heating orcooling and result in owner discomfort.The cause may be sloppy installation ordamage by a subsequent trade. The repairis as simple as unpinching the duct orreplacing any short sections that havebeen permanently damaged.

Flues Too Close to CombustiblesThis is a real life safety issue that can

cause fires (Figure 21, page 66). It’s some-thing the municipal inspector shouldcatch, but it often seems to be missed.Different types of flue vents have differ-ent distance requirements from com-bustibles. Generally, a single-wall ventmust maintain 6 to 18 inches or moreclearance, while a double-wall (B, BW, orL type) needs anywhere from 1 to 9inches, depending on the rating of theappliance it is venting. Many vents haveclearance guidelines printed directly onthe pipe. The stick in the spokes forbuilders is that many materials we nor-mally think of as not being combustibleare considered so by the fire safety sec-tion of the code. For example, drywall isconsidered a combustible material bythis code definition.

Sometimes the repair for a problemwith distance to combustibles is a sim-ple matter of exchanging a single-wallvent with a double-wall, thus decreasingthe required distance. Sometimes itmight require reframing the area. Thebest way to avoid problems such asthese is to remember that all flue pipescarrying products of combustionrequire some separation from com-

OCTOBER JLC 1998

Figure 20. A pinched ductcan result in uneven tem-peratures. It’s easy to fix ifit’s accessible, but easierstill to avoid.

Figure 19. Ponding in thebottom of a tub unit — theresult of an out-of-levelinstallation — is not struc-turally serious but is obvi-ous to any homeowner.

Figure 18. The chippedenamel in this cheap lava-tory sink is the kind ofdefect that will sendcondo or tract homeown-ers ballistic — especiallywhen they see it in everyhome on the block.

bustible materials and to follow themanufacturer’s installation instructions,which will usually state this require-ment very clearly. If you purchase thedevice and the flue separately, alwaysuse the flue recommended by the man-ufacturer of the appliance.

Breaches in FirestopsWith a mechanical firebox, a firestop

must be installed at each ceiling levelwhere the flue passes on its way to theroof. Firestops work the same way fire-blocking does to prevent fire from travel-ing from floor to floor, as in balloonframing. Specialty subcontractors ofteninstall fireboxes and firestops, and some-times the installation goes into an open-ing that was not properly framed. Insteadof calling for the framer to reframe theopening, which would cost the fireplaceinstaller and the framer time and money,the sub often completes the installationanyway, thinking that unless there is afire, no one is likely to ever know of theimproper installation. Gaps in firestopsare a definite code violation and a lifesafety issue (Figure 22).

Unsealed Gas Line Penetration in Firebox

Mechanical fireboxes are very com-mon in moderately priced SouthernCalifornia residential construction. Anunsealed gas line penetration at themechanical firebox is one of the mostcommon construction defects we see(Figure 23). It’s a problem because firethat is supposed to be contained withinthe mechanical firebox could spread tothe wood framing behind the box.Lucky for builders, it’s also easy to recog-nize and easy to fix.

There’s no removal of expensive fin-ishes needed. The repair is a simpleapplication of fireproof grout to sealaround the penetration.

Pete Fowler is a general contractor andconstruction consultant in SouthernCalifornia. Thanks to Kevin McCoy, C.E.,for his assistance with the structural sec-tions of this article.

OCTOBER JLC 1998

Figure 22. Firestops are an important safety requirement. Unfortunately, if a gap is missedby the inspector, all too often it will be permanently concealed from view.

Figure 21. As a matter of life safety, com-bustion appliance vent pipes must haveproper clearance to combustibles. Theguidelines are usually stamped right onthe appliance itself.

Figure 23. The pipe penetration intoa gas fireplace must be properlysealed with a firestop material — adefect that’s easy to spot and easy tofix with fireproof grout.

www.petefowler.com E: [email protected] 927 Calle Negocio, Suite G, San Clemente, CA 92673 T:949.240.9971

9320 SW Barbur Blvd., Suite 170, Portland, OR 97219 T: 503.246.3744 75 Manhattan Dr. #110, Boulder, CO 80303 T: 303.554.0381

P e t e F o w l e r CONSTRUCTION S e r v i c e s , I n c .

Portfolio Management of Construction Claims

For building industry players who are engaged in multiple construction claims (builders, general contractors, larger trade contractors, material manufacturers, insurance companies, attorneys) each case can be considered a single battle in a larger war. Deciding how much to spend on each claim – each battle – is hard. How do these expensive decisions get evaluated? Although it should not be guesswork, it often is. PFCS has created a structured process for making these complicated, difficult, strategically important, return-on-investment (ROI) decisions. PFCS will show you a method for managing your portfolio of construction claims, helping you develop a process for evaluating the costs of various scenarios in construction claim handling. At any point in any case, whether you’ve spent $1.00 or $3 million, you can ask and answer, or at least estimate, these key questions: How much has been spent so far? How much will it cost to get out now? What is a small fight worth? A big fight? What might trial costs look like, and is it worth the risk? As anyone familiar with litigation knows, each of these questions is likely to have best-likely-worst case answers. The cheapest option is sometimes to get out of the case early, after only the most preliminary analysis. But claims run the gamut, so sometimes a long, expensive fight is the cheapest, best solution, especially if a good outcome will influence other cases.

Key System Components 1. Claims Management Plan: Brief strategy and tactical document including written

objective, executive summary, litigation budget, written agreements with attorney and other vendors, a timeline, and a Claims Plan Manager job description.

2. Company Level Analysis: Worksheet that is a master list of all cases with best-likely-worst case scenario figures and a strategy summary for each. This includes a summary of all the individual Project Level Analysis worksheets.

3. Project Level Analysis: Worksheets for each case including best-likely-worst case figures for Attorneys, Experts, Other and Settlement/Judgment costs at various levels of litigation including immediate settlement, a small fight, a big fight and through trial. This includes a summary of the Vendor Scope-Budget Matrix worksheets, plus a settlement hypothesis.

4. Vendor Scope-Budget Matrix: This is an individual budget from each vendor on each project broken down to conform with the Project Level and Company Level Analysis worksheets.

5. Meeting Agenda / Minutes: Structure for preparing for, reviewing and updating the analysis periodically.

www.petefowler.com Construction ContractorCompany Level Analysis

6/23/2011

# Claim DemandBest Case Scenario

Likely Scenario

Worst Case Scenario

Strategy Summary

123456789

1011121314151617181920212223242526272829303132333435363738394041424344454647484950

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www.petefowler.com Construction ContractorProject Level Analysis

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L1: Spent L2: Now/ASAP L3: Small Fight L4: Big Fight L5: Trial1 Attorney Fees2 Best Case3 Likely Case4 Worst Case56 Expert Fees7 Best Case8 Likely Case9 Worst Case

1011 Other12 Best Case13 Likely Case14 Worst Case1516 Settlement/Judgment17 Best Case18 Likely Case19 Worst Case2021 Total22 Best Case $ - $ - $ - $ - $ - 23 Likely Case $ - $ - $ - $ - $ - 24 Worst Case $ - $ - $ - $ - $ -

ScenarioLineLevel

11-900Analysis - Project Level 11-08-12 For mediation purposes only. Protected by all applicable evidence codes. Page 1 of 1

www.petefowler.com Construction ContractorScope-Budget Matrix

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Hours Costs 1 Level 1: Preparatory Work 0 - 2 A. Images & Information Memo TBC - 3 B. Document Index TBC - 4 C. Issues List TBC - 5 D. Unit Matrix TBC - 6 E. Site Plan/Map TBC - 7 F. Meetings, Teleconferences & Correspondence TBC - 89 Level 2: Preliminary Investigation 0 -

10 A. Investigation Recommendations TBC - 11 B. Inspection Request with Random Selection TBC - 12 C. Inspection Documentation TBC - 13 D. Players List TBC - 14 E. Scope of Work Matrix TBC - 15 F. Plaintiff Estimate Summary TBC - 16 G. Project Summary Memo TBC - 17 H. Plan Review Memo TBC - 18 I. Cost Estimate - Order of Magnitude TBC - 19 J. Meetings, Teleconferences & Correspondence TBC - 2021 Level 3: Analysis 0 - 22 A. Issues-Discussion Matrix TBC - 23 B. Testing Request with Random Selection TBC - 24 C. Testing Summary TBC - 25 D. Testing Maps TBC - 26 E. Damage Maps TBC - 27 F. Issues-Locations Matrix TBC - 28 G. Scope of Repair TBC - 29 H. Opinion Letter TBC - 30 I. Research Memo TBC - 31 J. Meetings, Teleconferences & Correspondence TBC - 3233 Level 4: Detailed Analysis 0 - 34 A. Request for Proposal TBC - 35 B. Issues-Summary Report TBC - 36 C. Allocations TBC - 37 D. Meetings, Teleconferences & Correspondence TBC - 3839 Level 5: Final Analysis 0 - 40 A. Deposition Questions TBD - 41 B. Deposition Summaries TBD - 42 C. Presentation Outline TBD - 43 D. Presentation (PowerPoint) TBD - 44 E. Exhibit List TBD - 45 F. Expert Designation TBD - 46 G. Meetings, Teleconferences & Correspondence TBD - 47 Totals 0 $ - $ - $ - 48 *D=Done, IP=In Progress, TBC=To Be Completed, TBD=To Be Determined

Line Scope of Work/Deliverables Status*Plan Estimate

Cost to Complete Billed to Date

11-900Scope-Budget Matrix 11-08-12

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State of the Construction Defect Industry · 10/12/2017 · Defect Industry: What's the Same and What's New." Pete Fowler Construction Services, Inc. has been talking, presenting