BE CAREFUL WITH YOUR PROPOSAL.

Many times the enthusiasm of contractors intent on impressing project owners or contractors is expressed in proposals that contain statements like:

• “Our scheduling program will eliminate schedule coordination problems.”
• “Our dedicated project team will reduce cost and optimize schedule.”
• “Our attention to detail minimizes program costs.”
• “We are best at managing resources to achieve the best results.”
• “Our programs, systems and personnel lead to project success.”

When such proposals later become part of a contract, whether by incorporation or attachment, the enthusiasm and promotion can become a mine field for litigation. As project relationships deteriorate, optimistic, self-promotional statements like those listed above are interpreted by the contractor’s adversary as “promises” that, when unfulfilled, lead to breach of contract claims. Terms like “eliminate”, “problems”, “optimize”, “minimize”, “best results” and “project success” can assume unintended importance when the project does not achieve the “results” those terms “promise”.

So what is a contractor to do?

First, recognize that construction is a risky business, that any number of factors can affect the outcome of a project, and that many of those factors are beyond the control of the contractor.

Second, temper the “predicted outcomes” reflected in the language of your proposal. For instance, instead of “Our scheduling program will eliminate schedule coordination problems”, substitute “Our scheduling program helps us reduce or better manage schedule coordination problems.” The latter language is a statement, not a promise, and recognizes there may be “schedule coordination problems” the contractor can’t “eliminate.”

Third, avoid having your proposal become a part of the contract. If there are parts of your proposal you want covered by the contract, have only those specific terms expressly included in the contract. This avoids having the entire proposal becoming as binding as other parts of the contract. If you are going to suggest that only parts of your proposal be included in the contract, be mindful that your contract adversary may suggest that the entire proposal be incorporated. Unless your proposal has been tempered as suggested above, you may be stuck with “sale promises” that will later be interpreted as “performance promises”.

Fourth, if your proposal contains technical language that you intend to have a specific meaning, clarifying the language so the meaning you intend to attribute to the term is clearly understood.

Fifth, if your proposal must contain performance based predictions, be sure to clarify that the “performance prediction” is based upon “information known at this time”, or “the following set of criteria”, or is “subject to change as the project progresses”. This will at least provide some outlet for modifying the performance prediction in the future as circumstances necessitate.

Sixth, document any changes in the circumstances upon which your proposal was based in order to demonstrate there were reasons beyond your control that prevented the “performance prediction” set out in the proposal from being achieved. These same changes in circumstances will often also serve as the basis for requests for additional compensation or time in the form of a change order.

Construction is a risky business. There is no reason to magnify that risk by creating unrealistic expectations in your contract adversary based on unrealistic performance predictions contained in your proposals. Following the tips listed above will help minimize that risk.

Steven K. Metcalf