With the Y2K deadline only weeks away, businesses everywhere are scrambling to ensure their computer systems are compliant. The construction industry is feeling pressure, as computer technology plays a crucial role in almost all aspects of construction , from bidding, design and engineering through final completion.
The impact of Y2K failures could be significant. Most construction companies run software applications to increase efficiency in scheduling, estimating and accounting. Many depend on computer-controlled security systems, phones, elevators, HVAC systems and other office equipment. Others rely on computer-controlled processes or machinery.
And, every company depends on suppliers and other strategic business partners who may or may not be prepared for Y2K.
What can be done at this point to minimize business losses and exposure to liability?
& #711; Gather
Information
Who is relying on you? On whom do you rely? Consider your current projects. List the players. Gather contract documents, warranties, indemnity agreements, insurance policies and contact information. Ascertain what deadlines or schedules may be impacted by a failure on Jan. 1. Determine what contract obligations are to be performed at the beginning of 2000.
What computerized systems do you have? It may be too late to begin a comprehensive assessment and remediation project, but there is time to identify obvious computerized programs and inquire about their Y2K readiness. Locate warranties and purchase information, contact manufacturers directly or visit manufacturers’ Web sites to learn more.
It may also be helpful to consult local or national building industry organizations as these groups have gathered a great deal of information about the impact of Y2K on their constituents.
Companies should also appoint a Y2K manager to centralize the information that is collected and ensure a consistent message about Y2K readiness is being communicated to business partners and clients.
& #711; Consider
The Y2K Act
Congress recently passed the Y2K Act, a measure that was created in anticipation of the litigation landscape that may develop should problems arise. The act attempts to offer additional protections for prospective defendants and at the same time block frivolous claims.
Keep in mind that when signing the act, President Clinton emphasized that parties who do nothing to prepare for Y2K problems should not expect to be protected by it. Instead, companies must be able to demonstrate that they have approached the date-change problem responsibly.
To ensure that the Y2K Act provides your company with the maximum legal safeguards, there are a number of precautions to take.
o Plan ahead. If something can be accomplished, or materials can be delivered before the new year, do it in 1999. Schedule some flexibility during the first several days of the year.
o Consider contingency plans. If you foresee a supplier not meeting obligations, plan alternatives to cover your losses. If you foresee not meeting your own obligations, notify those relying on you. Help them mitigate potential damages. Attempt to reach agreements concerning potential failures or extensions of time if there are disruptions. Follow the golden rule of contracts , GET IT IN WRITING.
o Watch out for potential causes of personal injuries. The Y2K Act does not limit damages for personal injuries or deaths. Identify common causes of personal injuries. Review safety procedures with your personnel. Make sure safety devices are working properly. Update your safety procedures to comply with relevant codes or standards.
o Mediate. If you are affected by a Y2K failure, recognize the strong message from Congress and minimize the damages. With the Y2K Act’s waiting periods, there should be opportunities to work out problems without litigation.
As the new year rapidly approaches, it is important to remember is that it is not to late to follow the course of action prescribed by experts since Y2K forecasting began , assess your computer-related systems and technologies so you are prepared for what is to come, communicate with your business partners and take steps now to minimize the impact of any work delays or other slowdowns that occur in January.
Preventive action is a simple but effective strategy that can help reduce the likelihood of costly problems in 2000.
Lytle is an associate attorney with the San Diego law firm of Higgs, Fletcher & Mack LLP. His email is (dlytle@higgslaw.com).
