Construction submittals provide the owner, architect, contractor, and subcontractors with critical and detailed information on the products and materials to be incorporated into a construction project. Thus, it is of crucial importance that they are timely submitted, conform to the project documents, and receive requisite approval from the design team and/or owner. This importance commonly causes headaches for the associated parties, which can lead to disputes, and potentially, lawsuits. Two recent court cases illustrate the problematic scenarios which can arise from the submittal process along with the possible differing judicial outcomes.
In United States of America ex rel. Modern Mosaic, Ltd. v. Turner Construction Co.,1 each of a subcontractor’s shop drawing submittals followed the common construction industry standard of requiring formal certification and approval prior to fabrication of the construction materials.2 According to the subcontract, the submittal designation “Revise and Resubmit” meant that a portion of the submittal did not comply with the design intent of the contract documents and that fabrication, manufacture, or construction was not to proceed. The subcontractor had submitted four shop drawings for architectural precast concrete wall panels for a parking garage. Although, the first two sets were returned, stamped “Revise & Resubmit,” the subcontractor began fabricating the panels. The subcontractor’s third set of shop drawings were also returned, stamped “Revise & Resubmit.” Later, the subcontractor’s fourth set of shop drawings were returned and stamped “Approved as Noted,” with notations from the architect stating the location of the embeds needed to be field verified. The subcontractor then continued to fabricate panels without field verifying dimensions. As a result of the premature fabrication, the subcontractor had to redesign and re-fabricate a number of panels because of the dimensional discrepancies. Although the subcontractor filed suit against the prime contractor to recoup its costs from re-fabrication and storage resulting from the discrepancies and delays, the court ultimately found the subcontractor breached the subcontract when it fabricated materials prior to receiving fully approved submittals, thereby nullifying the subcontractor’s right to compensation.
In contrast, the court in C. Norris Manufacturing, LLC v. BRT Heavy Equipment, LLC 3 held that a subcontractor’s failure to submit timely design drawings that delayed contract completion was not a material breach, or even a breach, of the parties’ contract. The contract to construct barges required the design drawings to be completed and submitted to within two weeks of execution of the contract and first payment. The parties had prepared a schedule showing design, fabrication, and assembly activities for the barges. The contractor ultimately terminated the subcontractor, claiming its failure to timely submit compliant drawings delayed the project. The contractor alleged that it was impossible for the subcontractor to have completed the project by the deadline and therefore it had breached the agreement. The subcontractor countered the only delay was for six days, which was not a material breach under the contract. Upon inspection by the court, the contract did not specifically make the failure to submit the drawings within the two weeks a material breach and the contract was not a “time is of the essence” contract. According to the court, the deadlines in the contract and the surrounding circumstances did not warrant an interpretation that the agreement was one where time was of the essence and the late design submittal was not a breach even though the project was delayed.
Shop drawing submittal and approval frequently foster disputes and often cause project delays. One of the difficulties of measuring the effect of shop drawing delays on project completion is determining what the original duration for the approval should be. How long should a schedule provide for the approval of shop drawings? The current norm in construction scheduling is to provide only one, twenty-day duration for review and approval of any shop drawing. But these two cases confirm the reality that shop drawings are not always approved in one submittal cycle. Multiple cycles may be required, but an allowance for additional cycles is traditionally not included in a construction schedule. And multiple submittal cycles before approval are regularly necessary.
Is it reasonable to presume only one cycle? On one recent nuclear plant construction project only one submittal approval cycle was included in the original construction schedule. Approval actually required a multiple shop drawing approval cycles in excess of a year, with some resubmittals taking six or more months to prepare. Without shop drawing approval fabrication, delivery and of course construction, was stopped. In another project that involving locks to raise and lower river heights it took a year for the design of innovative hydraulic gate jacks to be approved, delaying their fabrication and installation. Approval was delayed when the parties disputed whether the original design was beyond the capability of the construction industry to produce. Surely when innovative design is part of the construction project more than one cycle should be anticipated and the appropriate duration included in the schedule? But few schedules anticipate multiple cycles for review and resubmittal of design drawings for key parts of an innovative design. But even more common, design drawings may require multiple submissions if the designer or owner reviewer is not satisfied with color, texture, size, quality, or any other number of ordinary preferences or concerns.
Most always it is the resubmittal requirement that parties dispute. What is the cause of the resubmittal? Was the reviewing entity, whether owner or designer, demanding reasonable revisions? The contractor or whoever makes the submittal will usually challenge whether resubmittal is necessary. But it is difficult to refuse to implement the demanded revisions without jeopardizing completing both the project and that part of the project subject to the design rejections. Not only is there the risk of delay associated with a resubmittal, but also there is always an additional cost associated with the resubmittal. On larger construction projects a resubmittal may involve twenty designers or more, considering that in-house approvals may be necessary, before a resubmittal can be made.
Shop drawings are part of most all construction projects. But a one-cycle submittal approval should not be presumed.
Michael T. Callahan
President of CCL Construction Consultants, Inc.
1 2017 U.S. Dist. LEXIS 35489 (N.D. W. Va. Mar. 13, 2017).
2 It should be pointed out the subcontract requirement in this case that the subcontractor was to obtain approval of its shop drawing submittals before fabrication is almost universal and certainly included in all standard form construction contracts, but notwithstanding the common nature of such contractual provisions, there are relatively few court cases adjudicating them.
3 2017 U.S. Dist. LEXIS 38850 (N.D. Ohio Mar. 17, 2017)
