General Terms and Conditions, frequently referred to as “Boilerplate,” defines how the Client and Consultant will relate to each other in a business relationship without regard to a specific project. The following is a critical “Boilerplate” item that if not clearly and equitably stated will likely result in misunderstandings and confrontational situations:
Stop Work Authority – Having the contractual right to direct a contractor to stop work should be held by the contractual entity that is in the best position to deal with the consequences of that action. In almost every case, that entity would be the Client. The moment that a “stop work” direction is received by the contractor, a whole host of complications, costs, and schedule related claim items will begin to be tracked. Since dealing with these claims will ultimately become the responsibility of the Client, only the Client should make the call to “stop work”. Unfortunately, not all Clients understand this and frequently attempt to shift that responsibility to the Consultant. Along with the contractual acceptance of the authority to stop the work, usually comes with the implied responsibility to stop the work when the Consultant deems that to be an appropriate action. Additionally, damages resulting from a Consultant stopping the work may not be covered by professional liability insurance. For example, when work is stopped, delays and inefficiencies almost always occur. These delays can result in consequential damages such as economic loss resulting from not having use of a facility. Consequential damages are almost always excluded from professional liability policies.
When asked by the Client to accept the contractual authority to stop work, here are some strategies for the Consultant to consider:
- Attempt to redirect the Client so that the client has the stop work authority.
- Offer an alternative that the Consultant will recommend that the work be stopped when, in the Consultant’s judgment, it should be stopped.
- Offer an alternative that the Consultant will accept responsibility to reject or recommend rejection of work that, in the Consultant’s opinion, does not meet the requirements of the contract documents.
- If the Client insists that the Consultant have the stop work authority, seek an indemnification from the Client for any and all damages that result from the Consultant giving stop work direction.
- When the Consultant has the stop work authority, the Consultant should also have a comprehensive role in the construction observation process.
- When the Consultant has the authority to stop work, extraordinary diligence in documentation of all construction activities is warranted.
Regardless of who has the stop work authority, it is essential that this authority be consistent in both the contracts between the Client and Consultant and between the Client and the Contractor. Additionally, stopping work should only occur with the Owners concurrence.