January 30, 2013 Articles

Use, Abuse, and Control with RFIs

This article identifies current problems with the use of the RFI process and outlines a potential solution

by Megan Wells and James G. Zack Jr.

Project designs have become considerably more complex over the past several decades. Increased project complexity results in a greater likelihood that errors, conflicts, omissions, and ambiguities will survive the owner’s quality-control review process. As a result, contractors need to review the working drawings, specifications, addenda, amendments, and other contract documents very thoroughly, more thoroughly now than in the past. Unfortunately, it seems that this review is most often performed after bidding takes place, not before. If the contractor finds conflicts, errors, or omissions, it is required to notify the owner or the owner’s representative to seek clarification or interpretation. Such inquiries and their responses need to be documented in the project records. Typically, such requests for clarification or interpretation are transmitted to the owner in the form of a request for information (RFI). Thus, RFIs are a tool of the construction industry intended to identify problems and seek solutions. However, a trend of a different sort has developed concerning RFIs. The purpose of this article is to identify current problems with the use of the RFI process and outline a potential solution.

Abuse of RFIs

The RFI process has been subverted. Contractors that are bent on making claims have discovered a new use for RFIs. Rather than using RFIs to seek information, some contractors pursuing a claims strategy use the RFI process for all project communications of all sorts. RFIs are routinely used in place of submittals, for substitutions, to respond to notices of nonconformance, to transmit safety plans and schedule submittals, and to substitute for both daily project correspondence and even telephone calls. What is the advantage of using RFIs in this manner? By using RFIs this way, a contractor is able to assert the claim that the project was not fully designed at the time of bidding. Thus, soft- cost claims arise based on increased project staffing, delay impact, and decreased labor productivity. And if a contractor can show a judge, jury, or arbitration panel that there were more than 4,000 RFIs on the project, then triers of fact are more likely to award such soft cost damages to the claimant.

Why has this statistical approach to proving inadequate design been so much more successful than claiming negligent design? The construction industry has always used terms like hard-dollar contract, fully designed projects, and lump-sum contract. The industry has left the public (including judges, jurors, and even some arbitrators and mediators) with the impression that every detail of a construction project has been thought through and addressed before the project was put out for bids. Thus, the public equates project bidding with purchasing a new car. Everything is supposed to work without a flaw. Then, when they find out that there were more than 4,000 RFIs on a project, they assume that something must have been wrong on the project; someone didn’t do his or her job! As a result, they easily side with the contractor claiming that it bid a fully designed project; that the additional field office staffing cost, all project delays, and the decreased labor productivity suffered on the project were all a result of an incomplete design; and that because the owner is responsible for the design, the owner owes the contractor.

The argument is simple and logical on its face. Try the argument on anyone who is not familiar with the construction industry and you are likely to find that 90 percent or more of the people tested would agree with the claimant. So what’s wrong with the argument? A number of things. If all 4,000 documents were truly RFIs, that is, requests for interpretation or clarification concerning apparent problems found within the contract documents, then one would tend to agree that the project was not properly designed. But what if 500 of the supposed RFIs were truly submittals of some sort or another and 1,700 were actually project correspondence, while another 150 were really substitution requests and yet another 400 were responses to notices of nonconformance and 800 were the same RFIs submitted more than once (i.e., fishing expeditions)? And what if 300 of the remaining 450 RFIs were answered the same day they were received and with a one-line response directing the contractor to look at this specification section or that detail on a drawing? Would one still agree that the project was not fully designed? It is doubtful. And yet, this is what the authors commonly encounter when faced with the claim that all loss of productivity and all delay were purely the result of multiple RFIs.

Despite this sort of analysis, the argument that a large number of RFIs somehow demonstrates that the owner is liable for additional time and cost continues to be very successful—so successful, in fact, that some contractor-oriented claim seminars now have sessions on how to profit through the use of RFIs. It is the authors’ contention that this technique will continue to grow unless owners take positive action to put an end to abuse of the RFI process.

Owners Are Part of the Problem

How are owners responsible for the paperwork games played by contractors? Simple. Few owners take the time and effort to define terms like RFI, plan clarification, substitution, and nonconformance notice in the contract documents. And even fewer still take the time to establish an RFI processing and response system in the contract documents and in the field trailer. Thus, while owners frequently complain about the paperwork games played against them, they make little effort to defend themselves. Owners need to do more than complain. Owners need to examine their own internal project processes to determine whether they are fair and prompt and then describe these processes in the contract documents so that contractors understand what systems are in place and how they operate.

A Potential Solution

It is the authors’ belief that most owners would be well advised to add some definitions to the general conditions of their contract documents. Further, owners ought to draft a specification dealing specifically with the issue of RFIs—for example, when and how they are to be used and the owner’s minimum response time. The remainder of this article presents a series of recommended definitions for use in contract documents, proposes a recommended general condition article concerning RFIs, and briefly discusses a system to be implemented to help defeat the abuse of RFIs.
 

Definitions

There are numerous terms and procedures that exist in any owner organization that are not reflected in the contract documents. Thus, while the owner and the owner’s representatives are cognizant of the terms and the processes, contractors are not. Despite this lack of knowledge, owners frequently assert the position that contractors ought to know how they operate. After all, some say, they have been doing it this way for more than 20 years. This statement may well be true. In reality, however, the standard a contractor is held to is what is set forth in the contract documents.

To prevent misunderstanding between the owner and the contractor over some project procedures, it is recommended that the following guidelines and provisions be considered for addition to certain definitions in the general conditions of the contract documents. Clarifying these definitions in the contract documents will help defeat the paperwork game played with respect to RFIs.

Drawing Clarification or Plan Clarification

  • Describe the intent of the drawing or plan clarification system. These actually exist on most project sites but are rarely described in contract documents.
  • Establish what a clarification is and that it is used to make a point better understood.
  • Provide a minimum owner response time to forestall delay claims due to clarification response time.

Nonconformance Notice

  • Establish a system for notifying the contractor when the owner determines some portion of the work does not conform to contract requirements. The contractor is required to provide a specific response to nonconformance notice (not an RFI) to such notices within a specific time frame.
  • The owner has a specific time frame in which to withdraw the notice or order a correction to the work. The contractor is then given a specific time frame in which to correct the work. The contractor may, of course, make a claim concerning such direction, but under this system, the work will have been corrected, thus mitigating project delay.

Project Communications

  • Draw a distinction between routine project memos and letters and RFIs, submittals, substitution requests, and the like.
  • Allow the owner to reject routine project communications that are presented as RFIs.

Requests for Information

  • Establish that an RFI can be used only to seek interpretation of an issue from the owner, requiring that the contractor outline what issue needs clarification and why.
  • Place an affirmative duty on the contractor to set forth its understanding of the project’s requirements so the owner can take that into consideration when providing a response. The intended result is that no claim can arise due to the owner’s direction.

Substitution, Shop Drawing, and Schedule Submittals

  • Draw a distinction between an RFI and a request for substitution submittals, shop drawing submittals, and scheduling related submittals.

The authors contend that the primary reason contractors are able to manipulate the RFI process is that owners lack the ability under their contract documents to reject documents that are not truly RFIs or to keep phony RFIs out of the RFI log. Definitions such as those set forth above will give the owner a mechanism to help stop these practices.

The RFI Clause

Definitions will not put an end to this game absent further contract language. A clause needs to be incorporated into the General Conditions that establishes the process and the timing concerning RFIs and their responses. The following guidelines and provisions will help owners defend against this type of claim.

  • Allow only the prime contractor to submit an RFI.
  • Require that all RFIs be in writing and be submitted only on the RFI form provided by the owner.
  • Require the contractor to clearly state what the issue is and set forth its  own interpretation in writing. If the owner finds the contractor’s interpretation reasonable for the needs of the project, the owner can simply advise the contractor of that and direct the contractor to proceed with its own interpretation. It is less likely that a claim for changes can arise from this situation.
  • Allow the owner to predict the approximate number of RFIs likely to occur based on its own past project experience,. This serves the purpose of putting bidders on notice concerning the complexity of the project, and it should help prevent the contractor from claiming it did not bid sufficient field staffing to support the number of RFIs on the project.
  • Establish the owner’s right to review all RFIs to determine whether they are RFIs as that term is defined in the contract documents. If it is determined that the contractor is trying to abuse the RFI process, the owner can return the RFI document unreviewed. This language helps prevent large numbers of phony RFIs from entering the RFI log.
  • Establish the owner’s review time, and if the owner determines it will take longer than the established time to provide the requested information, then the owner is obligated, within an established time frame, to inform the contractor of a date on which it can expect to receive a response. If the contractor submits an RFI concerning a schedule activity that the established review days or less float on the schedule, then the contractor is not entitled to a time extension due to the time it takes the owner to respond. This provision will, it is hoped, cause contractors to review issues early enough so as not to cause any delay to the project.
  • Establish the position that RFIs provide interpretations or clarifications and should not give rise to change orders. This should allow the owner to initiate a change to the contract requirements by noting in the RFI response that the response will cause a change order to be issued (to be followed up by a formal change order). Provide that if an RFI response is considered by the contractor to be a constructive change, then the contractor must so notify the owner in writing as soon as possible. This language is intended to give the owner the opportunity to reconsider the response and avoid a claim of constructive change. Finally, the language should state that failure to provide the required written notice of change will cause the contractor to forfeit its right to make a claim.

The RFI Review System

To complete the owner’s defense against abuse of the RFI process, the owner needs to establish a formal in-house RFI review processing system. To carry out the process, it is recommended that the owner assign one knowledgeable individual to be in charge of the RFI review process. This individual should personally receive all documents labeled “RFI” and should review them the same day they are received to determine whether the documents truly are RFIs. After determining that a document is actually an RFI, the individual should enter it into the RFI log and process it for a response. This individual should also track all RFIs in process to determine that timely and accurate responses are made.

It is also advisable for the owner to establish a system to categorize or classify RFIs. Possible classifications could be architect/engineer error or omission, change made by owner, answer in contract documents, RFI previously asked and answered. Categorizing RFIs will provide additional defense later on, especially with respect to RFIs that have responses clearly set forth in the documents or RFIs asked more than once.

If, on the other hand, it is determined that the document submitted is not an RFI, then the document should be returned to the contractor the same day it is received. A standard form cover letter should be developed to ease the paperwork involved with such responses. In essence, the cover letter would state the following:

This document is not an RFI within the meaning of the Contract Documents and therefore is being returned to you without a response. This document has not been entered into the project’s RFI Log. It is a _______________. Please resubmit the document on the proper form for timely processing.

On projects that operate a system similar to this one, the authors are unaware of any successful claims concerning loss of productivity or project delay due to the multiplicity of RFIs.

Conclusion

The RFI process, originally a project communication process, has been turned into something of a claims game. The game has been effective because owners have not taken the time to modify their contract documents to include appropriate definitions of terms. Nor have many owners established a process in the contract documents concerning RFI reviews and responses. Finally, few owners have established an aggressive internal RFI review system to defend themselves against such claims games. As illustrated above, it is possible to incorporate language into the contract documents and establish a good internal system to preclude such abuse of the RFI system.

Keywords: construction litigation, request for information, soft-cost claims, project delay, plan clarification, substitution, nonconformance notice, response time, review procedures, contract definitions

Megan Wells, CMA, is a director at Navigant Consulting, Inc. James G. Zack Jr., CCM, CFCC, FAACE, FRICS, is executive director of Navigant Construction Forum, in Irvine, California.

The opinions and information provided herein are provided with the understanding that the opinions and information are general in nature, do not relate to any specific project or matter and do not necessarily reflect the official policy or position of Navigant Consulting, Inc. Because each project and matter is unique and professionals may differ in their opinions, the information presented herein should not be construed as being relevant or true for any individual project or matter. Navigant Consulting, Inc., makes no representations or warranties, expressed or implied, and is not responsible for the reader's use of, or reliance upon, this paper, nor any decisions made based on this paper.

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Copyright © 2013, American Bar Association. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or downloaded or stored in an electronic database or retrieval system without the express written consent of the American Bar Association. The views expressed in this article are those of the author(s) and do not necessarily reflect the positions or policies of the American Bar Association, the Section of Litigation, this committee, or the employer(s) of the author(s).