Construction Record Retention

Construction Record Retention

Because of their specific time limits, statutes of repose offer design firms greater protection against stale claims. They also help determine the minimum retention periods firms should keep their records. Generally speaking, firms should keep records for the length of repose plus 2 or 3 years to allow for a safety margin.

Keep in mind that approximately 9 out of 10 claims are brought within 5 years of project completion. What’s more, nearly all claims are filed within 10 years of substantial completion. Therefore, there is little reason to keep records beyond the length of your state’s statute of repose plus a short safety margin.

While the statute of repose in your state gives you a good guideline for how long to keep project documents, that’s only half the battle. The other half is determining what to keep.

Fortunately, your firm does not have to keep all of its records for 5, 10, or even 15 years. In fact, it is often best that your firm not keep everything. The reason is “discovery.”

Discovery is a legal process that allows opposing attorneys to get access to all of a firm’s records relating to the project. All, in this case, means every plan, every schedule, every memo, and every piece of correspondence, including e-mail. In short, every piece of information that a firm or its employees has kept, whether it knows that it has the information on file or not, is discoverable.

Discovery can turn up some ugly surprises if a firm has not taken a consistent and systematic approach to record retention. For example, records can be scattered among several locations. They can include drafts of plans that were later discarded due to discovered errors or omissions. Actual dynamite in a plaintiff’s attorney’s hands is copies of informal communication among team members. Informal correspondence, such as e-mails or memoranda, can include provocative remarks about a client or project or raise questions about the quality of the work performed.

The solution to limiting discovery is to develop and enforce a company-wide record retention policy that clearly states which records are to be retained, establishes schedules and methods for record destruction, and outlines where and how records are to be stored.

For more information, see Construction Litigation Hold

10 Tips for Record Retention

While there is no single record retention program that fits all companies, there are some simple rules of thumb you can follow. Talk with your attorney about the following ten suggestions:

The plan should be in writing and communicated to all employees. Clients should also be informed of your policy.

1. Construction document control means documents retained should include contracts, approvals, drawings, specifications, calculations, reports, design criteria and standards, records of phone calls, advisory letters, product research, submittal logs, site visit reports, correspondence with contractors, owners or agencies, change orders and close-out documentation.
2. “Working” documents, drafts and notes should be scheduled for destruction soon after the final documents are created. Keep only the final document, not all the iterations that lead up to it. Those early versions may contain incomplete or inaccurate information that could mislead a judge or jury.
3. Require employees to manage e-mail in accordance with company policy aggressively. Generally, most e-mail correspondence can be purged after relatively short periods — six months or a year.
4. Do not allow employees to archive records off-site. A forgotten box of records in an employee’s garage is as subject to discovery as those records found in an office file cabinet or on a company hard drive.
5. Make sure your record retention policy covers items such as desk calendars and daily planners. These items, whether paper or electronic, are subject to discovery.
6. Archive electronic records on an appropriate storage medium and consider keeping a duplicate copy offsite. Remember, however, to destroy both copies in accordance with your record retention policy.
7. Provide for suspension of record destruction in the event of pending or ongoing litigation. Continuing to destroy relevant documents when you know a claim is likely can be interpreted as an attempt to eliminate damaging evidence.
8. When the time comes, destroy the records as completely as possible. Discarded papers may be retrievable, so be sure that they are destroyed through shredding, burning or other irreversible methods. Consult with information system specialists to determine the most permanent method of deleting electronic data from your computer network.
9. Make sure your record retention plan is consistently applied from project to project. You don’t want to be caught doing a little too much “house cleaning” on that one job that went south.

Courts have shown that they are willing to accept a company’s explanation that records were destroyed in accordance with company policy only if the firm can show that its policy was consistently implemented. It is critical that all employees know, understand, and are familiar with the record retention policy.

Using the applicable statute of repose in your jurisdiction or jurisdictions, it is well-advised to establish and follow a formal record retention policy. Have it drafted or thoroughly reviewed by legal counsel and then distribute it to all.

Implementing such a system can go a long way toward eliminating the clutter of unnecessary paperwork while ensuring appropriate records are maintained in the event of a future dispute or claim.

What Records are Most Important to Keep?

The following information ought to be retained. It may prove valuable to understand the claim and develop a defense:

1. Contract between Architect and Client
2. Contracts between the Architect and sub-consultants
3. Construction contract between Owner and General Contractor, Construction Manager, or Builder (where available to the architect)
4. Insurance policies of sub-consultants
5. Other insurance policies and bonds, where applicable (e.g., Builder’s Risk Policy, Performance Bond, etc.)
6. Communication documents such as emails, letters, faxes, etc.
7. Minutes of meetings
8. Bid and tender documents
9. Drawings and specifications
10. Certificates of Substantial Performance, Letters of Assurance, Statements of Completion
11. Field review reports, site review notes, site observations, and photographs
12. Supplemental instructions
13. Change Order logs, RFI logs, and shop drawing logs
14. Certificates of Payment and Progress Payment support documentation
15. Budget documentation