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Design-Build Disputes in Construction of Food Processing Facilities

TASA ID: 2482

Food facility construction projects involve an owner and a contracting firm (or firms) that team together to design and build a complete facility to meet owner specifications. The design-build business arrangement has many important advantages, some of which are shown in Table 1. The purpose of this document is to introduce some of the key issues in disputes that may occur between the owner and contractor(s) in design-build projects.

 

Table 1. Advantages of design-build contracting

Issue

Owner

Design-build firm

Timing

Compressed time frame compared to other methods

In-house cooperation reduces time lags

Responsibility

One firm does all

Increased scope and profit potential

Bid process

Single package

Lower sales expense

Cost

Potential cost savings

Lower overhead

Quality

Improved quality

Increased control of quality-related issues

 

Food manufacturing facility design is a complex undertaking that requires many sequential steps and concurrent activities. Hidden pitfalls exist at every step of the way. An equilibrium must be developed between the three key issues of design, economics and product requirements. Seven common factors that cut through all three key issue areas are (Expert #2944774768, 2006) hygiene and sanitation, market demographics, research and development, safety and regulatory concerns, site selection, timing, and trends. An understanding of these factors can be very helpful in analyzing design-build disputes.  Other unique issues can have significant impact on design-build projects.

 

Standards are formal documents that affirm methods and practices of design and construction. Standards are common in the construction industry and have application in every design-build project. Unfortunately, standards for food processes, facility design, and food equipment have not been well-developed. Many disputes arise when involved parties miscommunicate expectations based on perceived standards. For instance, "cleanable" may mean smooth and corrosion-free food contact surfaces to one business entity and "Clean-In-Place" ready to another.

Work on design-build projects is frequently started prior to design completion. This means that structural steel and equipment may be on order, soil moved, and concrete poured prior to designing the entire project. Work started before design completion can result in a significant time savings when initial activities are independent or function with the incomplete portions of the design. When initial activities contradict final design, disputes are inevitable. Diagnosis of disputes is more straightforward when an understanding of the initial concept, final design target, and work rationale is exhaustive and well- documented.

 

Project quality is one of the most frequently cited advantages of the design-build process. In part, quality is achieved because of the skills, training, organization, experience, ethics, and spirit of the work team. Quality will suffer drastically if the team loses organization, has impaired communications, practices poor ethics or loses spirit. Team continuity is another important factor. If the owner or the design-build firm loses or moves leading or conspicuous team members, quality will diminish.

Conflicts stemming from claims of completed work are habitual in design-build projects. The owner may feel that he has been overcharged for work or charged for work that hasn't been completed. Analysis of completed work is required for resolution. This may be more difficult than expected, especially if rework is involved or if the claim is aged and additional construction/modification has taken place. A fully operating food processing facility can be difficult to investigate when pipe chases, ductwork, and wiring are enclosed in overhead areas or tunnels that may be dangerous due to heat, darkness, confined spaces or other hazards. Facility, mechanical and process drawings may not exist or may not be up-to-date. An experienced eye can assist in many cases to know where to look for overcharged or incomplete work, and how to measure and estimate its value.

 

Change orders authorize work outside of the original scope of the project; and therefore, represent additional cost to the owner. Change orders often constitute the majority of the profit for the contracting firm on design-build projects, and, as such, can be very significant for the owner and contractor. They are initiated by the owner, or are written by the contractor, and approved by the owner before any work is started. A minimum number of change orders is expected on any design-build project, but any change order might be grounds for dispute. If the proper protocol has been followed, the records will serve to help resolve issues quickly; otherwise, the entire scenario may need to be recreated to determine how the problem happened, what was decided and, how the change order was met.

Underlying stories and themes are important to understand in any design-build dispute. What aspects of the project held the most interest and time of the laborers and tradesman? Were travelling workers involved, and what were their ethics and living conditions? Did extensive off-site construction and delivery of pre-plumbed piping, manifolds or equipment fixtures and supports occur? Was labor misused (e.g. were skilled laborers working at tasks below their level)? Were drawings adequate and well executed? Were inspections timely and appropriate, and did they provide useful feedback? Were supervisors well-qualified and available on the job? Uncovering and piecing together underlying stories can be of major importance to solving design-build disputes.

 

The owner is normally responsible for the technology, recipes and historical knowledge of the product and process. Contractors may know a great deal generically about these areas, but often don't have the razor-sharp perspective that accompanies the R&D and production experience of the owner. For example, the owner's representative knows the look, feel and smell of top quality, salable product through every step of the process. A particular process step requires a particle-size reduction. The contractor has vast experience in size reduction technology as applied to a wide variety of food and industrial products. Based on his knowledge, the contractor specifies the most efficient equipment to achieve uniform size distribution. The owner's specification calls for this, but his representative knows that the excessive heat created by that particular size reduction technique could overcook the product. This information must be communicated to prevent disaster. The owner normally provides one or more knowledgeable representatives who have familiarity with the process and SOP's of the owner's business.

 

Design-build disputes in construction of food processing facilities can be very costly and time consuming. Quick and fair resolution to disputes is an advantage to both parties. Unfortunately, complex issues, irrelevant information, misunderstandings, and deceitful practices can complicate and slow down the resolution process. An expert with experience in food facility and process design can provide a great deal of insight into problem solving, clearly identifying, defining and evaluating alternative explanations and approaches that help those involved gain knowledge leading to resolution.

 

References

Expert #2944774768 2006. Food Processing Facility Design. In Handbook of Farm, Dairy and Food Machinery. Myer Kutz editor. William Andrew Publishing, New York. pp. 579-608.

 

This article discusses issues of general interest and does not give any specific legal or business advice pertaining to any specific circumstances.  Before acting upon any of its information, you should obtain appropriate advice from a lawyer or other qualified professional.

This article may not be duplicated, altered, distributed, saved, incorporated into another document or website, or otherwise modified without the permission of TASA.

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