Sunday, October 5, 2014


DESIGN AND CONSTRUCTION DEFECTS - Exterior Insulation and Finish System (EIFS)

Clients retain METROPOLITAN on a variety of defect claims and disputes.  Our clients have included plaintiff Home Owners Associations, plaintiff contractors, defendant contractors and design professionals, and third-party contractors, and fourth-party contractors.

We often perform on-site investigations to determine the cause(s) of various distresses and non-performances of building materials, products, assemblies, systems and components, along with the causes(s) of the construction defects.  Additionally, METROPOLITAN is often requested to provide general construction defect repair and building remediation recommendations to correct identified defects and deficiencies, and to establish the probable costs associated with the construction defect repairs.
We are often retained as the construction defect causation expert and/or as the cost of repair expert in building disputes to allocate cost of repair damages between the parties. The process of allocating cost of repair damages can be described in several steps:

  • Identifying the parties potentially responsible for designing, installing, supervising, inspecting, approving and maintaining the work
  • Identifying the parties actually responsible for designing, installing, supervising, inspecting, approving and maintaining the work
  • Establishing the percentage of responsibility that each party bears
  • Establishing the amount of repair cost that each party bears, e.g., repair cost allocation.

The cost of repair allocation analyses is similar in many ways to the causation analyses we perform on other types of claims and disputes.
A significant portion of our defect consulting and expert witness services been associated with determinations of whether the building defect and damage claims resulted directly from the insured’s defective workmanship or from consequential causes. Predictably, a large segment of our consulting and expert witness work involves water intrusion and other architectural issues.

According to the definitions of the International Building Code and ASTM International, an Exterior Insulation and Finish System (EIFS) is a no-load bearing, exterior wall cladding system that consists of an insulation board attached either adhesively or mechanically, or both, to the substrate; an integrally reinforced base coat; and a textured protective finish coat.
EIFS with Drainage, another EIFS system, is the predominate method of EIFS applied today. As the name implies, EIFS with Drainage provides a way for moisture that may accumulate in the wall cavity to evacuate.

EIFS were first introduced in the United States in the late 1960's, and were first used on commercial buildings, and later on homes. EIFS typically consist of the following components:

  • An optional water-resistive barrier (WRB) that covers the substrate
  • A drainage plane between the WRB and the insulation board that is most commonly achieved with vertical ribbons of adhesive applied over the WRB
  • Insulation board typically made of expanded polystyrene (EPS) which is secured with an adhesive or mechanically to the substrate
  • Glass-fiber reinforcing mesh embedded in the base coat
  • A water-resistant base coat that is applied on top of the insulation to serve as a weather barrier
  • A finish coat that typically uses colorfast and crack-resistant acrylic co-polymer technology.

The Pros and Cons of EIFS
The people that marketed EIFS did a good job of convincing the public that it was far superior to stucco, because it was light weight and didn’t crack.  In fact, they did such a good job of putting the fear in the public’s eye, that cracking in stucco meant that the integrity of the building was at stake.
EIFS has its place and works well in the right environment.  EIFS is a great product to use in a retail situation where, in most cases, it is applied to a metal structure, with the intent that it will probably be remodeled or changed often.  EIFS is a great application for this, because it is inexpensive to tear it out and change the face of the building.
EIFS has become a disaster in more permanent applications like homes and churches, especially on wood structures.  In most cases, homes are a lifetime investment, and the home owner is not in a position to tear it out and change it up as they would in a retail situation.  The problem arises when moisture is allowed to get into the walls, usually through penetrations such as windows or doors, or any penetration for that matter.  Once moisture gets into the wall, it becomes trapped and causes the structure to rot.  Because EIFS is flexible and will only crack in extreme situations, the substrate and framing can be completely rotted out with no sign of problems from the outside.

Why EIFS Fails
EIFS primarily fails because there is NO moisture barrier protecting your wood when rain gets in.  When rain gets trapped behind the foam the water begins to mold or rot the wood underneath the building envelope.  The moisture gets trapped between the foam backing and the wood sheathing it is attached to.  Usually EIFS synthetic stucco is glued on or put on with grommet style fasteners.  When rain penetrates ANY cracks or openings and gets behind the EIFS, it is unable to evaporate because of the constant moisture we get. The moisture attacks the wood sheathing, framing, and studs simply because it can't escape or drain out.  This leads to dry rot and toxic mold problems because of the constant rain we have here in the Portland area.  The dry rot and mold damage can often cost as much as the new siding to replace it because after it gets into the wood it starts to eat away at the studs & sheeting.  The rotting wood underneath the EIFS ultimately leads to the destruction of the homes structure if left untreated.
Common moisture problems appear around the areas where the EIFS meets the windows, wood trim, roof flashing, and doors. EIFS that sits below the dirt or grade is also an easy entrance point for moisture and insects to start working.  We have found that the worst insect problem is carpenter ants which nest in soft moist wood.  We often see the damage they can do structurally as we were replacing LP siding or EIFS stucco.  
Although most EIFS manufacturers have detailed installation instructions, these are often ignored by installers since few siding companies have experience installing EIFS in the Portland metro and southern Washington area. EIFS simply never should have been brought to our climate.
Another common issue with EIFS is the failure to install proper flashing systems that can hold up with the rain and the expansion/construction caused by the varying temperatures of the summer and winter months.  On 9 out of 10 EIFS homes that we deal with the existing flashing is improperly installed or missing altogether allowing large amounts of moisture infiltration causing dry rot and mold damage on the interior framing and wall surfaces.

How EIFS is installed and removed
EIFS is typically attached to the outside face of exterior walls with glue adhesive or mechanical fasteners designed for this application.  To remove EIFS, generally it is scored with a sharp knife.  When EIFS is glued on, it is much harder to remove than when it is put on with fasteners because it has to be meticulously & slowly scraped off inch by inch.  The white Styrofoam stuck to the glue is HIGHLY resistant to coming off.  In most areas, EIFS is usually attached to gypsum board, OSB (oriented strand board) or real plywood.  That surface should be continuous (not "open skip framing").  It should be flat and very stable.  When it isn't glued it has the fasteners installed in a random pattern.  This is a bit easier than glue but still difficult to remove since the fasteners end up being wherever the original installer felt like putting them.  The installation could have been every foot to every few feet.  When the foam beads fall apart they need to be contained quickly although it would be impossible to contain every foam bead.  It is a nightmare if any winds start up.

 Legal issues
EIFS systems have been the subject of numerous lawsuits due to moisture buildups and subsequent mold growth.  The most notable case concerned the former San Martin, California courthouse.  This case was settled for 12 million dollars.
The basic underlying problem behind EIFS litigation was that EIFS was marketed as a cost-effective replacement for stucco.  Stucco is expensive to install because it cracks over time.  Stucco must be carefully applied by skilled craftsmen so that the cracks which will inevitably develop are subtle and not obvious.  General contractors who migrated to the northeast and northwest from the south during the building boom of the 80's and 1995-2007 switched to EIFS because it was supposed to be easy to install with unskilled or semi-skilled labor and would not crack like traditional stucco.  Many general contractors cut corners by using unqualified cheap laborers.  Partially due to these unskilled workers, thousands of EIFS installations were noncompliant and suffered severe water intrusion and mold as a result.  While the EIFS industry has consistently tried to shift the blame to GCs, the construction industry has retorted that using professional unionized journeymen carpenters in turn eliminates the cost advantage of EIFS over stucco, and that the EIFS industry should have anticipated this issue and engineered its products from the beginning to be installed by unskilled labor or semi-skilled labor (that is, it should have been a fault-tolerant design).
The EIFS systems can work well and be good solutions but they require a higher level of protection from moisture.  There are many factors that have contributed to the damage of the homes due to water infiltration.  Here are some of the arguments regarding the common cause of failures:
1.    Poor architectural design that traps or directs water back into building assemblies and does not allow sufficient drainage;
2.    Failure to detail a well thought out moisture management plan and specifying the wrong materials for a given application;
3.    Poor workmanship and substandard construction practices;
4.    Moisture generation from the building occupants and lack of maintenance.
5.    Building components get wet and damaged by
a.    wind and gravity driven rainwater through leaks in the building envelope;
b.    capillary action, water being absorbed from surrounding wet materials or conditions;
c.    air movement of moisture carrying air in and out of the building envelope;
d.    moisture flow through diffusion from a higher humidity environment to a lower humidity environment

A high performance moisture management system would consist of the following components:
1.    Weather resistive barriers (WRB), Drainable WRB (best practice); for maximum protection utilize rain screen systems (best practice);
2.    Step and kick-out flashings at roof wall intersections;
3.    Adhered flashing systems for windows, doors and all penetrations;
4.    Through-wall flashings at transition of dissimilar claddings;
5.    Through-wall flashing and a weep system at the base of wall for masonry/stucco claddings;
6.    Prefabricated seamless flashing boots for roof penetrations;
7.    A continuous exterior air barrier system and interior air sealing;
8.    An interior vapor barrier as required by local codes

Examples of the projects METROPOLITAN has worked on as Construction Defects Experts in EIFS-related disputes include:

  • Defending the Project Manager/Construction Manager at Mets stadium in New York regarding alleged defects in, amongst other things, the fabrication, installation and construction of the exterior insulated finish system (“EIFS”) located on the plaza level of the Stadium.
  • Representing the plaintiff in an action against the architect on a hotel in Texas, wherein the hotel experienced mold infestation during and after construction.
  •   Representing the Owner, prepared repair recommendations for a damaged EIFS system at a retail chain store in Pittsburgh, PA.
  •   Performed quality/assurance review of architectural EIFS and brick veneer system design for a university campus administration and classroom building in Trenton, NJ.
  •   Performed forensic review of EIFS skin design, window design, and construction for a 10-story condominium structure in New York City, NY.
  • Performed hundreds of forensic investigations at EIFS-clad homes and commercial facilities throughout the US.  Prepared damage assessment reports, maintenance guidelines, costs for removal and replacement of the EIFS.
  • Representing the plaintiff in an action against the builder/developer, identified deviations from manufacturer’s recommendations in an EIFS skin at a single family home in New Haven, CT.
  •  Performed peer review services as well as services for defendants in several cases involving modified stucco systems with foam trim and molding details covered by traditional stucco.

METROPOLITAN has been retained as Construction Defects Experts on a wide range of construction and design defects matters.
Hotel Building Wrap
Delays to Building Closure, and Exterior Insulation and Finishing System (“EIFS”)
On most hotel projects, achieving building closure and dry-in are critical milestones. Had the structural concrete work been performed per the contract schedule, the subcontractor would have had time to complete its Exterior Insulation and Finishing System (“EIFS”) work over the summer of 2011, before the fall and winter seasons, and permanently dry-in this New York condo/hotel project.  However, the general contractor was not substantially complete on the roof until early October 2012.  Therefore, the sub could not complete its EIFS system before the cold weather set-in.  This resulted in the need to first wrap the building in August 2012 to achieve temporary dry-in, and then rewrap the building (as a result of subsequent wind damage).  Temporary dry-in was achieved around the end of December 2012, thus allowing the GC to heat the floors and the sub to tape/texture drywall. 
The six-month- delay to temporary dry-in resulted directly from the GC’s structural concrete and roof steel delays, which resulted in:
1.    Delays to EIFS work;
2.    The requirement to wrap and rewrap the building, and;
3.    Delays to building heat, D/W tape and texture, doors, tile, guestroom finishes, etc.
A storm destroyed the wrap and the rewrap was paid for via the sub’s builders risk insurance claim.

Construction Expert – Residential Construction Disputes
$15 million Multi-family Condominium Project, Mahwah, NJ
Our General Contractor client submitted numerous change order requests, and the Owner approved $1.8 million on this multi-family residential project.  However, the Owner unreasonably rejected approximately $700,000 in change requests. METROPOLITAN’s analysis of these Proposed Change Orders (PCO) revealed that the Owner’s rejection of the PCO was unreasonable.  Our client submitted numerous requests for time extension to the Owner.  The Owner approved certain requests and granted a total of 60-days, thus extending the contract completion date.  The Owner also rejected numerous time extension requests.  The certificate of occupancy was issued 365-days after the amended contract completion date.  Based on the results of our CPM schedule delay analysis, the Owner was responsible for the majority of this delay.

$13 million residential homes, New York City, NY
METROPOLITAN was retained by the GC who had been sued by the Owner for cost overruns on a residential construction project built under a Cost of the Work Plus a Fee contract.  The primary issues related to the differences between the project, as indicated in the incomplete contract drawings, and the home as constructed.  Costs increased as the design and finish requirements for the home evolved, in large part as a consequence of more expensive owner selections.  The owner tried without success to hold our client to its initial estimate and to characterize the value of changes between the estimate documents and the contract documents and other compensable changes as “underbid.”  The Owner lost this case.
$16 million residential development, Trenton, NJ
METROPOLITAN was retained by the Owner who had sued the GC and architect for cost of repair damages resulting from a wide range of design and construction defects on this residential construction project.

The construction defects expert’s process of assigning responsibility and allocating defect repair costs basically centers around:
1.    Identifying the parties potentially responsible for designing, installing, supervising, inspecting, approving and maintaining the work,
2.    Identifying the parties actually responsible for designing, installing, supervising, inspecting, approving and maintaining the work,
3.    Establishing the percentage of responsibility that each party bears,
4.    Establishing the amount of repair cost that each party bears, e.g., repair cost allocation.
Cost of repair allocation analysis is similar in many ways to the causation analyses we perform on other types of construction disputes.
We are unaware of any magic formulas defining either the accountability or financial liability/allocation processes.  Using algebra to solve for unknowns won’t work and neither will the use of advanced mathematics such as Laplace Transforms.  These processes demand much more traditional applications.
And, in contrast to the methods employed by a few less experienced construction defect consultants we have encountered, a particular party should not always be allocated a particular percentage of the damages. For example, the general contractor should not always be allocated a certain percentage of the damages simply because it was the “general contractor.” Life is not so simple, and neither is the construction defect cost of repair causation and allocation processes.

The process of allocating either estimated or actual repair costs to the responsible parties will depend in substantial part on the quality and quantity of the available project documentation.  Any or all of the documentation typically produced through the discovery process could have an impact on the final construction defect cost allocation.  There is not enough space available in this blog to address the potential relevance of each category of documentation.  Therefore, we focus here on only a few categories:
Assuming that the contractor’s bid proposal was incorporated into the contract documents, any inclusions or exclusions in the bid could be relevant.  For example, we have seen situations wherein the subcontractor’s bid excluded work for which the HOA had later sued the general contractor.
Experts begin with an analysis of the construction contract when assigning responsibility for the work.  However, even Standard Forms such as AIA Documents can conflict with each other and/or State law.  Our construction defects experience reveals that custom agreements are much more likely to contain ambiguities relating to the parties responsibilities.  Similarly, written amendments that seemed clear to the parties at the time often become murky after a building dispute arises.
Was it built per plans and specs? Such an easy question to ask, but often such a difficult question to answer. Consider a few of the possibilities:

  1. The work was built according to the plans/specs and is not deemed defective;
  2. The work was built according to the plans/specs, was not defective at the time of acceptance but is deemed defective now;
  3. The work was not built according to the plans/specs, was not found defective at the time of acceptance but is now found defective;
  4. The work was not built according to the plans/specs, was not deemed defective at the time of acceptance because it satisfied and still satisfies the intent of the plans/specs, but is now deemed defective by the opposition.
  5. The plans and/or specs contain errors, the work was built to the plans but was not found defective at the time of acceptance, is now deemed defective by the opposition but not by defendants experts.
  6. The plans and/or specs contain errors, the work was not built to the plans, was not found defective at the time of acceptance, and is now deemed defective by the opposition and by defendant’s experts.

Just because it wasn’t built per plans and specs, doesn’t necessarily mean the work should be or has to be repaired or replaced

The parties’ course of dealing during the construction project can modify the terms of the written agreement.  Email, personnel interviews and depositions are often the best ways to investigate this topic.  For example, the contract indicates that the trade contractor was to call for inspections but the general contractor later orally assumed responsibility for that task.
It is not unusual for numerous parties to have written construction supervision and inspection responsibilities on a project.  We have worked on projects where the owner, developer, architect, engineer(s), general contractor, subcontractor, and outside agencies each inspected the work in an effort to ensure that it was built per plans, specs, codes, ordinances, etc.  The task then becomes, how to reasonably allocate the cost of construction defect repairs under the circumstances where so many parties might have contributed.
Construction projects are most often comprised of many different products and types of work. And, it is not uncommon for many of these materials and products to have significantly different warranty types and durations.  Grading and drainage can have a short duration warranty period and can be adversely impacted after the CO by HOA and homeowners, which might then affect the structural warranty. On the other hand, manufactured products can sometimes have 30, 40 or 50 year warranties.
Considering the many factors that can be involved in the construction defect litigation process, and recognizing that precise arithmetical formulas are not applicable to the cost of repair allocation process, one can readily understand the value of analysis and opinion of an experienced construction defects consultant and construction defects damages expert witness.
Metropolitan Engineering, Consulting & Forensics (MECF)
 Providing Competent, Expert and Objective Investigative Engineering and Consulting Services
P.O. Box 520
Tenafly, NJ 07670-0520
Tel.: (973) 897-8162
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