November 01, 2014

Playing Nice With Others: Coordination on a Multi-Vendor Project

Faegre Baker Daniels partner Brian Clifford authored the following article for the Control System Integrators Association in November 2014.

In some respects, the new development of, or substantial upgrade to, an automated facility is like a typical construction project — it can involve multiple firms retained by the project’s owner, all performing work simultaneously in the same area, and all dependent on the work of others for the proper performance of their own services. When working on such a multi-vendor project, there are many considerations that should be addressed in your contract to be sure that everyone “plays nice” with each of the other project participants. These include: 

Coordination of the Firms: Which entity is responsible for the coordination of the services between the separate firms? Is it a “general contractor” or other project manager professional? Or is the owner performing this service itself? (If nothing is said in the agreement on this topic, this is likely the owner’s obligation.) Does that entity have the expertise and experience to handle such coordination issues, including scheduling the sequential and logic performance of the services and addressing conflicts and gaps between the multiple vendors’ scopes of work?

Review of Work of Others: Are you required to “sign off” on another firm’s work prior to commencing your own services? Project owners will often include a provision in their agreement forms that states that, by starting your services, you acknowledge that the previously-performed services of another firm are “fit and proper” for your performance. This can include an obligation for you to integrate your deliverables into the hardware and systems provided by others, even if it is unknown at that time whether or not such systems are free from defects and properly operational. These provisions add significant risks to an automation firm’s project responsibilities.

Responsibility for Damage: What happens if another project participant damages your in-progress deliverables at the project site? Are you stuck with the “risk of loss” until the owner accepts such items, or is there a mechanism for you to obtain an increase in your contract price to cover necessary repairs or replacement? What about jobsite injuries? Are you covered as an “additional insured” on the liability policies of the other project participants whose operations may cause injuries to your employees? Likewise, are you responsible for delay costs and other expenses incurred by another project participant arising from your performance?

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