Legal Benefits and Pitfalls of Contractor Quality Control Programs
Construction is a highly competitive industry and the days when clients are willing to accept a trade-off among low price, fast project turnaround and high-quality workmanship are gone. The expectation to design and build projects within constrained budget and schedule limitations while providing uncompromised workmanship amplifies the importance of effective contractor quality control programs.
Whether developing a QC program for a newly-established company or analyzing long-standing procedures of one of the world’s largest contractors, it is important to consider the legal consequences of a QC program, many of which may not come to light until long after a project is over. When done well, QC programs can not only minimize overall project costs and defective workmanship they can also guard against risks associated with disputes. When done poorly, however, QC programs can create hidden problems that may cause significant unanticipated costs if disputes arise.
Understanding the potential legal problems that can arise requires some review of the operational problems associated with poorly implemented QC programs. Many contractor QC programs struggle to balance practicality, comprehensiveness and effectiveness, and err too far in one direction or another. QC programs developed with a bias toward practicality are often underdeveloped and overly dependent on contract documents and industry standards as the sole basis of quality control efforts on any given project. Such reliance is simply not enough and the effectiveness of such a program can be lost entirely.
While QC programs should certainly utilize contract documents, specifications and other applicable standards as one component of a good QC program, an effective program will go further, setting out company-specific, step-by-step processes. Such processes include everything from conducting job safety analyses and pre-job meetings, to shoring trenches, erecting scaffolding, receiving and inspecting materials delivered to the jobsite, and any other work process applicable to a contractor’s business. In short, an effective QC program should be evident in all processes throughout the organization.
On the other end of the spectrum are contractors that latch on to the concept of comprehensiveness but lose sight of the need for sustainability. These contractors tend to develop unwieldy QC programs that address problems by adding more QC processes regardless of the burdens that result from them. When a program becomes so voluminous that it slows job productivity or leads to pencil-whipping QC reports, the program has not only lost effectiveness and likely increased operational costs, it has become a potential legal liability.
These operational problems can also indicate potential legal challenges for a contractor that finds itself needing to assert or defend against claims in a dispute. For example, “bare bones” QC programs can be used to suggest that a contractor lacks basic knowledge or has failed to perform its work according to a normal standard of care or workmanship. Comparatively, overly-comprehensive programs tend to be filled with requirements that are either ignored by employees or are blindly followed. In such cases, a quick review of project documents often shows that a contractor is literally and figuratively just checking a box on a project requirement. Although such practices might fulfill an immediate project documentation need, the long-term consequences in a dispute may far outweigh any benefit thought to have been gained during the project.
A QC program is similar to any other written policy or procedure a company may have. The first way to avoid problems is to be thorough and purposeful when developing the program. Then, once implemented, make sure that the program is followed consistently. The following are some suggested guidelines for developing or reviewing a QC program.
Keep the Program Simple
Keep the program as simple as possible while accounting for all essential steps of a task or process. A contractor’s own written requirements may be viewed as admissions by the contractor of the necessity of such requirements to complete a given task. Employees must be willing and able to implement the program’s written requirements, day in and day out. If work procedures are too cumbersome, some employees may cut corners when necessary to keep a project moving forward or when it feels convenient to do so. The fact that corners were cut will almost certainly come to light when relevant to a dispute. A contractor can mitigate against potentially adverse facts by being analytical in the design and implementation of a QC program to ensure that it is both comprehensive and workable.
Document Information with a Purpose
Similarly, when developing quality control forms on which to record information, think about what needs to be recorded and why. Do not task employees with recording information that does not add value to the process. Develop forms that ask for information necessary to prove if and how work was performed as required by the internal procedure, project specification, applicable code or manufacturer’s requirement. Almost nothing should be extraneous or optional. Remember that where a program requires some action to be taken and documented, the absence of a record can be compelling evidence that may help or hurt in a dispute.
Focus on Employee Training
Having a written QC program is no better than having no QC program at all if the written program is not accompanied by a contractor’s commitment to train its employees on the program and the procedures relevant to each employee’s job. Employee training is a continual process, not a “one and done” proposition.Training programs should be written around three prongs:
- initial training;
- refresher training; and
- corrective action training.
Start by developing job qualification forms for each company position but be precise when determining what training is required for each position. Once established, provide initial and refresher training to employees as often as practical. Be mindful that failing to train employees as required by a company’s own program can be construed as an implied admission that an employee is not qualified to perform the most basic functions of his or her position, and could undermine credibility of the company, the individual, or both, in a dispute.
Conduct Integrated Process Reviews
Require superintendents and project managers to review quality control documentation as part of their routine responsibilities. In other words, integrate these reviews into operational processes. The frequency of these reviews will vary depending on the type of work being performed but these reviews are critical to make sure the program is being implemented as intended on an ongoing basis. These reviews are more than just making sure a report exists for each day of work and should be focused on flagging information that may be incorrect or indicative of a problem. Develop a process for how any problems identified will be corrected and make sure that, once identified, the problems are resolved moving forward.
Perform Objective Internal Audits
Routine internal quality control audits are helpful to verify compliance with the QC program and identify potential problems before they become costly. These audits should be performed by dedicated quality control personnel or others who have no direct responsibility over the project or process being audited. Develop an audit schedule and make sure all facets of the program are being routinely evaluated.
Share Relevant Information
Disseminate information throughout the company to appropriate stakeholders. Whether resulting from on-going reviews by superintendents and project managers, or from internal audits, make sure lessons learned are shared throughout the organization. Evidence that a company has institutional knowledge of a problem that was not shared with other stakeholders can create a negative inference that a contractor knew or should have known that issues requiring correction existed.
Always Seek "Out of the Box" Perspective
Evaluate quality, safety and other operational issues by drawing on insight from cross-functional teams, including outside consultants and advisers with relevant experience. Do not rely only on quality personnel to solve “quality” problems. Do not rely only on safety personnel to solve “safety” problems. Utilize diverse teams to evaluate issues from all angles and craft practical, sustainable solutions that add value to each project and minimize otherwise unforeseen risks.
This article first appeared in the Construction Executive on March 3, 2020.