Owner slow to install their equipment

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Author Message Tom Peck Senior Member Username: tom_peck_csi Post Number: 36 Registered: 08-2004 Posted on Monday, September 25, 2006 - 11:47 am:    We did a State agency project that was completed one year ago and just recently went thru the one year warranty inspection by the A/E. The project included plumbing/drain systems for a future, owner installed water treatment system. To date, the owner has not installed their system. A question arose ... when the owner does finally install their system (your guess is as good as mine as to when that will be) and the designed/installed system is finally put into service, how long can the contractor be held responsible if the system doesn't work? And, actually, the same with the A/E? It seems that at some point, the contractor (and even the A/E?) needs to be relieved of financial responsibility, wouldn't he? Or does this somehow revert back to the local statute of limitations? Thanks for your input. Ronald L. Geren, RA, CSI, CCS, CCCA, MAI Senior Member Username: specman Post Number: 333 Registered: 03-2003 Posted on Monday, September 25, 2006 - 12:02 pm:    Statute of repose for latent construction defects vary by state. For most states, it's 10 years, but varies quite a bit (i.e. in New York, it's 3 years). AIA has a list by state: http://www.aia.org/static/state_local_resources/liabilityreform/Repose%20Quick%20Reference%20Stat.pdf. For special situations like you mentioned, I'd check with an attorney that has construction experience. The owner (in your case the state), should also seek advice from the DA, or their agency's attorney if they have one. John Bunzick, CCS, CCCA Senior Member Username: bunzick Post Number: 577 Registered: 03-2002 Posted on Monday, September 25, 2006 - 03:12 pm:    One method to consider in future situations such as this is to require that the systems installed for future use be tested by the Contractor prior to turning the project over. David Axt, AIA, CCS, CSI Senior Member Username: david_axt Post Number: 727 Registered: 03-2002 Posted on Monday, September 25, 2006 - 03:38 pm:    I agree with John about testing and having the Owner sign off on it. The Owner can't possibly expect to install equipment years down the road and then blame the Contractor for not providing an adequate system. George A. Everding, AIA, CSI, CCS, CCCA Senior Member Username: geverding Post Number: 221 Registered: 11-2004 Posted on Monday, September 25, 2006 - 04:09 pm:    To expand a bit on the two previous posts…in the specific case you mention, Tom, I'd assume the AHJ and your specification would require testing (pressure test, etc.) of the supply and drain to the future equipment to assure there are no leaks. At the point of successful testing, the contractor has delivered to the extent of his contractual obligation: a workable rough in only for a future system. The clock on the statutes of repose or limitation starts running (actually, at Certificate of Substantial Completion, usually), and if a latent defect is discovered in the contractor's work while the clock is running, it is on him. If there is a problem with the Owner's subsequent installation of the system, regardless of when that actually takes place, it's on the Owner. While there certainly will be finger-pointing in both directions if a defect is discovered, I bet the limit of the contractors obligation to rough in only is spelled out fairly succinctly in the contract documents. Regarding the A/E, is that entity contracted to perform CA services when the system is installed? If so, then the clock starts for the system installation portion of the work when date of substantial completion for the system installation is achieved. If the A/E has no CA work on the system, then the obligation would only be for the rough-in portion, similar to the to the contractor. The installation of the system, when it occurs, should viewed as a separate contract, with its own unique scope of work, substantial completion, and time for limitations on liability. Tom Peck Senior Member Username: tom_peck_csi Post Number: 37 Registered: 08-2004 Posted on Wednesday, September 27, 2006 - 10:51 am:    Thanks for the input. Ron, the AIA link is good to have. John/David ... that is a great idea. I'll mention it. And that was our concern with having the contractor (and potentially even the A/E) liable in the future. In MN, that could be 10 years down the road ... the cost to the contractor (or A/E) [of course, assuming they are both in business then] at that time could be much more than if the defect(s) was discovered now. George, yes the systems were pressure tested, etc. And yes, the A/E provided CA services. Agreed, the clock starts ticking on both entities at SC. Thanks, again!