Appropriate records should be compiled and maintained throughout the duration of construction projects, This creates a contemporaneous history of what happened at what point during the course of the project that can be referred to if necessary. This not only establishes a ‘memory’ or ‘ paper trail’ for the project through which activities and decisions can be reviewed, it allows for the reconstruction, review and analysis of events and timelines should a dispute arise.
Legal requirements. Contractual requirements. To control work, To provide data for future work,
The extent of the record keeping required will depend on the type of project, A balance must be maintained between keeping adequate records in preparation for a dispute arising, and attempting to record everything, which is can be difficult, time consuming and costly.
Some record -keeping requirements, such as recording the minutes of meetings for example, may be carried out at the discretion of the individual organisation, with different frequency rates, levels of detail, and time for which records must be kept, appropriate for different situations. Other records may be a legal or contractual requirement, following prescribed rules.
For example, under the Construction Industry Scheme (CIS), contractors must keep a record of the gross amount of each payment invoiced by subcontractors, excluding VAT and any deductions made from subcontractor payments, These details must be kept for at least 3 years after the end of the tax year they relate to.
Ultimately, when the completed building is handed over to the client, a set of record information should be passed to them so they are able to operate the building, It is important that the standard of records kept is high, or they may not provide the expected information when they are actually required.
In particular, records should be dated (including incoming records ) and where appropriate, signed, and a document management system should be in place to allow efficient storage and retrieval. Information is now generally managed using specialist software, and apps that make the preparation of records easier and more reliable are also available.
- This can, for example allow records to be made on site using a mobile phone, which are then automatically uploaded to a project document management system,
- Increasingly, project information is prepared in the form of a building information model ( BIM ), and this may include project records as well as design and specification information,
An as-built or as-constructed building information model might be prepared on completion of construction works, consisting of documentation, non- graphical information and graphical information defining the delivered project, During operation, this might be described as an Asset Information Model (AIM), that is, a model that provides all the data and information related to, or required for the operation of the completed built asset,
Original contract tender documents, Tender negotiations and revisions. Sub-contractor tenders, contracts, purchase orders and correspondence.
Instructions, Variations and estimates, Contractual certificates, Contract notices, Requests for information,
Daily time records, Daily equipment use. Daily production logs. Material delivery and use. Labour use. Inventories of tools, plant and equipment,
Cost reports, Forecast-to- complete estimate updates. Productivity reports, Accounting records (e.g. pay-roll, accounts payable and receivable). Correspondence. Minutes of meetings. Progress reports,
Site diary. Progress reports, Progress photographs. Weather conditions, Site visitors, Accidents, injuries and health,
Surveys, Commissioning, Testing, Inspection, Defects,
Asset register, Health and safety file, Building owner’s manual, Building log book, Building user’s guide, Testing and commissioning data, Certificates and warranties, As-built drawings or an as- constructed building information model, Statutory approvals, waivers, consents and conditions, Equipment test certificates, Licences,
Correspondence records, such as letters and emails. As-built drawings and record drawings,
Capital allowances and super deductions, Collaborative practices for building design and construction, Contract award, Construction litigation, Contribution and apportionment, Damages in construction contracts, Design documentation, Design review, Difference between purchase order and invoice, Good faith in construction contracts, Human resource management in construction, Invoice, Legal and equitable assignment, Office manual, Project quality plan PQP, Purchase order, RIBA plan of work, Site administrator, Site visitors book, Team management for building design and construction projects,
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Construction contractors are in the business of documentation: contracts, reports, schedules, the list goes on. And that’s not including tax and financial records. Though most if not all this documentation is done digitally now, there are still questions about how long to keep certain records.
In any business, thorough recordkeeping can be the difference between something as substantial as a lawsuit or defending tax deductions to the IRS. In construction, documentation is risk management. Before figuring out an appropriate records retention policy, first understand that there are two distinct time periods from which a retention timeframe is based.
These are statutes of limitations and statutes of repose. A statute of limitations limits when one party can sue another. In construction, a statute of limitations can be indefinite unless a timeframe is specified in the contract. The period begins when a defect or injury occurs, which can happen at any point after a project is done.
Because a statute of limitations could theoretically last forever, construction firms should work with advisors to decide a retention policy for project documentation. A statute of repose, on the other hand, is based on a pre-determined timeframe. If a defect or injury occurs outside this window, claims cannot be brought against either party.
A statute of repose can begin either when a project is finished or upon some other trigger event, like occupancy. Almost all states have a statute of repose ranging from four to 15 years. In Virginia, the statute of repose is five years after project completion; in Washington, D.C.
How long should you retain construction documents?
Additional resources –
Construction Photo Documentation | Better Records, Fewer Disputes, Faster Pay Right to Cure | Resolving Disputes Without Claims or Legal Action How to Be a Successful Office Manager in the Construction Industry
Summary Article Name Construction Document Retention | Saving Documents Can Help Contractors Keep More Money Description We’ve written on this blog many times about the importance of documentation in the construction industry. But how long should you hold on to these records? And why? Implementing a construction document retention policy is an incredibly important aspect of running a successful construction business. Was this article helpful?
How long do you need to preserve Project Records in Missouri?
Considerations for retaining construction project records | Nuts & Bolts Blog Considerations for retaining construction project records By George Uhl on February 22, 2017 at 9:10 AM However, a claim for negligent professional services or for defective construction work may not become apparent to an owner until years after the completion of construction.
- This is particularly true regarding unseen or “latent” defects discovered through resulting damages to exterior wall assemblies, roofs and mechanical systems, often years after completion of a project.
- Investigating the extent and cause of damages often takes considerable time, sometimes up to a year, before an opinion is reached and the potentially liable parties are notified by the owner.
Altogether, the time from project completion to notification to the designer or engineer of alleged professional negligence or to the contractor for alleged defective construction may be many years. Statutes of limitations The applicable state’s statute of limitations creates a deadline for filing an action.
For example, under Missouri law, a suit must be filed within five years from the time the party bringing the action knew or should reasonably have known of the act or omission supporting an action in tort or contract. Statutes of repose To protect architects, engineers and contractors from unending liability to owners, many states, including Missouri and Illinois, have enacted a statute of repose.
Many such state statutes of repose, including those in Missouri and Illinois, create a time limit for the commencement of litigation or mandatory arbitration at 10 years from the date of the act or omission comprising a breach of contract or negligence.
- In Missouri, this 10-year date draws a bright line for bringing such an action.
- If the owner discovers a latent defect in the design or construction just days before the 10-year tolling period expires but fails to file an action on or before that date, the action is barred by the statute of repose.
- However, under the Illinois statute of repose, the owner would have the full time afforded by the Illinois statute of limitations, four years, in which to bring such an action, from the date of discovery of the latent defect.
Therefore, in Illinois, the 10-year statute of repose could be extended another four years to accommodate the Illinois statute of limitations using the same scenario. How long should project records be retained? Storing and maintaining project documents can be a costly burden on a company of any size.
- Large projects can generate enormous amounts of paper and electronic documents.
- Unfortunately, due to the possible discovery of latent defects in the design or the construction work, all parties in a construction project, including the owner, should retain project documents for a predetermined period of years after project completion.
Under state and federal law, many types of documents created and kept in the normal course of business can qualify under the business records exception to the hearsay rule. This business records exception can be very important particularly if several years have passed and the person(s) who created a business record either cannot be later found to testify or has died.
It is important to keep and maintain project records such as: 1) drawings and specifications, 2) design/engineering calculations, 3) project diaries, 4) reports, 5) requests for information (RFI) and responses, 6) meeting notes and minutes, 7) contracts and purchase orders, 8) change orders, 9) all versions of shop drawings and other submittals, 10) construction progress photographs, 11) site progress/field reports, 12) certificates of insurance, and 13) emails and other correspondence.
Any of these documents may contain key information that affects the outcome of a dispute regarding allegations of defective design and/or construction. Even if the witness who created a document is available to testify, these types of project records will likely be persuasive and will refresh recollections of important events that may have taken place many years before.
The following recommendations apply to only construction project documents, not to other types of company records. Missouri projects: If Missouri is the governing law, project records should be maintained and preserved for a minimum of 11 years after the project completion date, (one year beyond the statute of repose date of 10 years). Illinois projects: For projects governed by Illinois law, project records should be maintained and preserved a minimum of 15 years (one year beyond the four-year statute of limitations period plus the 10-year statute of repose date).
However, if the party is aware at any time prior to the destruction of any project documents of defective design and/or construction issues, the project records must be retained until the issues are resolved. A “litigation hold” should be issued within the company advising everyone to not destroy or discard any project-related documents.
Other states: If another state’s law is governing, it is necessary to determine whether that state has a statute of repose, the length of the repose and the length of that state’s applicable statute of limitations. An analysis should be done to determine whether that state’s statute of limitations can extend the time to file a suit or other action beyond the statute of repose (as it does in Illinois).
Although many states have a 10-year statute of repose, there are notable exceptions (i.e., Florida – 15 years, Alabama – 13 years, Pennsylvania – 12 years, Arkansas – eight years, Colorado – six years, Kentucky – none). These and other states’ statutes should be verified for each project.
- Public projects under federal or state law and contract requirements: For all projects, private or public, check the contract to see whether record retention is addressed and mandated.
- In both federal contracts and federally assisted contracts, such a provision is commonly included.
- For example, by incorporating 24 CFR 85.42, a federally assisted construction contract contains a requirement that certain kinds of records shall be retained by the contractor for a minimum of five years (or longer if any litigation, claim, negotiation, audit or other action is initiated before expiration of the five-year deadline).
Otherwise, Federal Acquisition Regulation (FAR) 4.7 is applicable to all contractors working on most federal projects (with several exceptions). FAR 4.7 identifies categories of documents to be retained and the minimum of years (either two years or four years from the end of the contractor’s fiscal year in which it allocated a cost to a government contract).
However, a newly enacted FAR 4.805 sets internal record retention minimums for the federal government’s departments and agencies that are longer than the minimum retention requirement imposed upon federal contractors. Develop and follow a company document retention protocol All design and engineering firms and construction companies should develop and follow a written document retention protocol for all project documents.
The company’s protocol will state that project documents can be destroyed after a stated period of time following final completion unless there is pending or threatened litigation or arbitration. If there are actions that could lead to actual litigation or arbitration or if such a dispute resolution proceeding has been initiated, a designated person within the company should issue a written “litigation hold” to all employees and officers of the company in order to prevent the destruction of any project documents.
Failing to preserve such records when a company is or should be aware of a pending dispute may lead to the imposition of sanctions against the company by a court or arbitrator for the company’s illegal spoliation of evidence. Such sanctions can be serious and impair a company’s ability to protect its interests in an action.
However, if a company has followed a reasonable document retention protocol and destroys project documents in accordance with its protocol while not aware of any dispute or claim against the company that could lead to litigation or arbitration, the company should not face sanctions for destroying evidence if such an action is later commenced by the owner.
Why is it important to keep records during a construction project?
Protection against liability – Anytime a change order, or back charge happens on a project, what’s your first instinct? You’ll likely grab a copy of the contract, or begin to review the daily reports and pay applications, Whenever a dispute arises, the best way to defend or clarify your position is through documentation.
That’s easy when something happens during the project. But not all problems occur on the job site, or even during the lifespan of the project. Some can arise months or even years afterwards. Your construction company needs to be sure it can defend itself against claims, or be able to enforce claims against others.
The ultimate issue is, that claims can arise long after the project is completed. If a dispute reaches the court, well organized records are not only your best line of defense, but also, your best ammo to prove your side of the story. On top of that, the other party may request certain documents through discovery.
How long should contractors keep payroll records?
Public works project requirements – If working on a prevailing wage project, contractors are required to keep certain documents for an extended period of time. Take for example, certified payrolls records, On federal prevailing wage jobs a contractor is required to retain certified payroll records for 3 years, and the supporting regular payroll records for 7 to 10 years.