Construction Risk Management: Keys to Sound Contract Administration Best Practices

Brian Swartz, SVP, Legal & Commercial, Aecon Group Inc, USA

Murphy's Law: "if something can go wrong - it will" For those of us who practice Construction Law, we have learned that Murphy actually invented two other secret laws, which he maliciously and deliberately failed to disclose: i. The first secret law holds that, "just when you think things have gotten back on track, they get worse". ii. The second secret law holds that, "just when you think things can’t get any worse, they will". Clearly Murphy was an optimist. The unhappy truth is that construction projects are very complex undertakings and, as a result, things rarely, if ever, go as planned. Unlike an industrial or manufacturing process, each construction project is a "one of a kind" undertaking. The construction budget and schedule are based upon unique drawings prepared by architects and engineers, which drawings are not detailed to the last nut and bolt and which quite often, given the fast track nature of the process, may contain missing, incomplete or contradictory information, interferences among drawings, and/or be based upon inadequate site investigation/assumptions. In the face of all of that, the contractor has to compete to win the project in a tender process which is based upon an estimate of all of the "ingredients" including, materials, labour hours and productivity, quantities and contingencies, which will all be included in a fixed price where the low bid wins. This process is a recipe for disaster.

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USA Contract Construction May 2008 Vol. 1, No. 4, Summer 2008

Brian Swartz

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Brian Swartz received his Bachelor of Laws Degree from Osgoode Hall Law School of York University in 1981. As Senior Vice President, Legal and Commercial, Brian has a broad portfolio of responsibilities at Aecon. He is Chair of the Aecon Project Review Committee, a member of the Aecon Executive Committee and a member of the Board of Directors of each of the wholly owned subsidiaries of Aecon Group Inc. Brian has executive responsibility for: strategic planning, legal, secretarial, procurement, risk and insurance, mergers and acquisitions, safety, labour relations and facilities services to the Aecon group of companies. Aecon is Canada’s largest publicly traded construction company. Brian has been actively involved in the development of many major international infrastructure initiatives, including toll roads, power projects and airports. He has previously acted as counsel to the Province of Ontario advising on innovative approaches to service delivery, commercialisation and outsourcing, and was a key member of the executive team that developed the Highway 407 Toll Road. Brian is a member of several professional organizations including the Canadian Surety Association, the Canadian Construction Association, and is Chair of the Executive of the Construction Law Section, Canadian Bar Association (Ontario) and a member of the Board of Directors of the Canadian Employers Council. He writes and speaks regularly on his areas of expertise.

Aecon Group Inc

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Aecon is Canada’s largest publicly traded construction and infrastructure development company. For almost 100 years Aecon has developed international expertise in design and engineering, project finance, construction and operations in all construction sectors (transportation, energy, buildings, including heavy civil, industrial, commercial and institutional buildings, airports and toll roads.

USA Contract Construction May 2008 Vol. 1, No. 4, Summer 2008