Questioning project Web sites

Online collaboration may pose business and legal risks

March 01, 2001 |

Use of project-management Web sites is growing rapidly, and for good reason. They facilitate the flow of information among the owner and A/E/C firms.

Usually owned and operated by general contractors for larger projects-or licensed to them by either a software or extranet company-these Web sites can offer significant savings in soft costs, such as travel and reproduction expenses. And, in the event of a dispute, they can provide accurate records of what communications were sent and received by the various parties-and when.

Productivity gains earned by using the tool, however, may pale when compared with risks implied by the technology. Like many other Internet ventures, project-management Web sites have developed more rapidly than the legal and business infrastructure that considers their legal risks. Not surprisingly, there is relatively little experience with the business and legal problems that can arise from the use of these Web sites.

Many unanswered questions

Administration of the Web site brings up numerous issues. Which software or extranet provider will be used, and who will make this decision? Who will be responsible for maintaining the Web site? Who will decide which parties receive various levels of access?

Internet companies have come and gone like the tides. What happens if the Web site provider goes out of business during the project? Moreover, the information on the Web site might be needed many years after completion of the project. Will the provider be around then?

Other concerns involve the insurability of the contents on the Web site. What if the server crashes and valuable work is lost or a project is delayed? Would insurance cover such an event, or is the Web site provider liable?

A problem may be posed by the reliability of information, drawings and documents on the Web site. Who is responsible for any errors or omissions that appear on the version of a drawing, specification or test result that is published on the Web site but not on the record or hard copy? Also, to what extent can subcontractors rely on and copy portions of the construction documents?

Contractual notice

Project Web sites may change the rule of contractual notice. Although most construction contracts have provisions requiring advance written notice of various claims or other issues, can communication via a Web site take the place of such notice? Can the parties to the project be deemed to have actual notice-which may legally obviate the need for providing written notice-of various issues or facts because the computer can provide the precise identity, date and time at which information was reviewed?

The impact of the Internet on traditional intellectual property issues is unclear. By posting and exchanging information on a Web site, does the author waive trade-secret information? For instance, will engineers, who typically remain the owners of their drawings, be deemed to have given up ownership rights?

The impact that use of project Web sites may have on litigation is also uncertain. For example, the "business records" exception to the rule barring admissibility of hearsay evidence in court requires a party who presents business records as evidence to establish that the information in them was recorded in the ordinary course of business and maintained with adequate safeguards to assure its integrity. How does the Web site host assure that the documents are properly signed, authenticated and maintained?

Project management Web sites will continue to proliferate. As they evolve, and as business procedures and legal rules evolve in parallel, new kinds of disputes will arise and new kinds of vigilance will be necessary.

Mark C. Friedlander is a partner and James D. Weier is an associate with the Construction Law Group of Schiff Hardin and Waite, a Chicago-based law firm.

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