There is quite a lot of discourse regarding daily reports in the construction industry. Some people think they are unnecessary and take too much time to be worth the effort. However, some may not consider how important daily reports are in regards to protecting you on the front end and defending you on the back end when it comes to a legal battle. Though filling out a daily report throughout the day or at the end of the day is a tedious task, it will help you in more ways than you know.
The first thing I ask clients who have received a demand letter stating that they are in default under the terms of their construction contract, is to make a timeline of the project, especially of notable events, accomplishments, and communications. If you take the time to do daily reports, you already have the timeline in hand, and we are ready to defend!
What is a Daily Report?
A daily report is a written account that describes the work done each day, who did the work, if any materials were used or delivered, and any other information that may be important. For instance, if your work is weather dependent, it may also include a weather report. Daily reports are also a great place to bring up anything you see coming that may be a potential issue.
Most commercial subcontracts require that daily reports be submitted, either in paper form or on whatever tech platform the general contractor uses to manage the project. Regardless of how you submit your daily reports, make sure you keep a copy to prove that you created the daily report and turned it in as required by the contract. If your contract requires you to provide daily reports and you fail to provide them, you are in default of the terms of your contract. Only trouble can come when you are in default; like not being entitled to get paid until the default is fixed or even having your contract terminated.
Ensuring Solid Evidence
I once represented a subcontractor client who had not been paid and filed a lawsuit to collect what they were owed. The general contractor counter-sued my client for breach of contract, claiming, among other things, that my client had breached the contract and was not entitled to be paid because they had failed to turn in daily reports as required by the contract. Although my client had turned in the required daily reports to the project manager at the project, he had no proof that this happened because he did not keep a copy. If he were in default as per the contract agreed upon, he would not be entitled to be paid. My client settled for less than 50% of what he was owed because if we went to trial, he might not have gotten anything because he truly was in default under the contract terms.
It is an invaluable idea to create a process of preparing daily reports for all your projects, whether your contract requires it or not. Daily reports are a terrific way to Cover Your Ass (“CYA”). The best evidence, in any case, will always be documents that are created before a dispute ever arises. Legally, a timeline of events created as the events unfold is almost as good as having a recording. A timeline created after everything happened is still helpful but is not credible evidence because it only exists after a dispute has occurred.
While taking the time to do your daily reports may be a bit annoying, ultimately, the many ways in which having that paper trail can serve you is an invaluable asset to protecting your company. Make the time investment throughout your project and ensure that your team of construction attorneys can defend your construction company as best as possible. You deserve to have secure and confident protection and implementing daily reports into your processes allows you to take that into your own hands.
About the Author
Published author, award-winning lawyer, devoted wife and mother to three girls, and Owner and seasoned Managing Partner of The Cromeens Law Firm (TCLF), Karalynn Cromeens is a true jack of all trades. Karalynn is the Co-Founder of Morrell Masonry Supply and Owner of The Subcontractor Institute, an easy-access online educational platform for contractors. In addition to TCLF, and The Subcontractor Institute, she is also the Host of the rapidly growing educational construction podcast, Quit Getting Screwed - making cost-free industry insight available to contractors across the country. In 2021, Karalynn published two Amazon Best-Selling books - Quit Getting Screwed: Understanding and Negotiating the Subcontract and, in September, Quit Getting Stiffed: A Texas Contractor's Guide to Liens & Collections.
In the seventeen years she has practiced construction, real estate, and business law, Karalynn has reviewed and explained thousands of subcontracts. For years, she has tried saving companies that have signed problematic subcontracts and lost out on being paid for their work. Unfortunately, it was too late by the time they came to her; she could do nothing to help. She hated seeing clients lose money—sometimes their entire business—over language they did not understand and laws they did not know about. Watching these situations play out day after day was the driving force behind her two books, The Subcontractor Institute, and the firm's accessibility efforts. Providing education to contractors on a national level has become Karalynn's personal mission, and she is always doing what she can to help make it a reality.