Specs in the City

If you ever wanted to make an Architect or Design Engineer cringe, explain to them that the project specifications they've so carefully produced, and that are back-stopped by their E&O insurance, could at any time be altered in the field without notice or consultation. Yet, this is a reality that is quite unique to the construction industry. The risk that someone may naively make a change "on-the-fly" to the specifications on a project and the potential for disaster that could result is significant. Even the most seasoned of construction professionals can fail to appreciate the full risk or impact these changes, that are often thought of as "minor", can have on the overall construction project.

Consider the following case pulled from our claims archives in which significant damages were incurred as a direct result of changes made to the original specification. In this case a $20,000 cost saving measure turned into a $1 million dollar nightmare.

The Structural Steel Contractor was retained by the City to supply and erect structural steel for a hockey arena. The structural steel was to be fabricated in the shop, sandblasted clean and given one coat of epoxy paint before being shipped to the site. The total contract price was $1,100,000.

The City's rep decided it would be better and cheaper to apply primer paint rather than epoxy paint to the steel in the shop and apply the epoxy later. He demanded a credit for the epoxy paint. The Contractor was reluctant but willing to oblige.

Unfortunately, the overall project was behind schedule. After the steel was erected, protected only with one coat of primer, it was exposed to rain, snow and frost for five months. By the time the building was closed-in, a significant amount of rust had formed on the steel. By this time, the damage was done. The task of repainting the structural steel after the steel was erected would be tremendously expensive. An argument ensued as to who would foot the bill.

The City argued that the rust had formed as the steel's surface had not been properly prepared prior to the application of primer. The City, confident in its position, hired a local painter to sandblast the steel clean and repaint. The inexperienced painter caused further problems by not properly dealing with the toxic dust created by the sandblasting operation. The initial estimate for the remedial work was $270,000, growing quickly to $722,000; over two-thirds of this coming as a result of unanticipated environmental clean-up costs. The City noted the Contractor in default of its contract and made a claim under the Performance Bond.

The Contractor argued that it had performed according to the modified specifications. Furthermore, the Contractor believed that the cause of the rust was not the surface preparation but rather a direct result of the combination of the change from epoxy paint to primer and the delayed close-in of the building.

The parties agreed to binding arbitration. After two weeks of expert evidence on the surface preparation of steel, corrosion and paint coatings, the Contractor was able to demonstrate that primer is a thin coat of paint that is designed to be porous to allow the top coat of paint to adhere to it. However, its porosity exposes microscopic sections of the steel's surface to the environment. If the environment is humid, condensation can bring water into contact with the surface of the steel causing it to corrode irrespective of how the surface of the steel had been prepared prior to coating it. The matter was awarded in favour of the Contractor and the City was stuck with the entire $1,000,000 bill.

The City's rep had the best of intentions in making the changes to the specifications. Unfortunately, he had no idea that in saving the City $20,000, he could cause it to spend $1,000,000 which coincidently is almost 100% of the original contract.

The moral of the story is, leave the specifications to the experts and build the project as designed.