Was there ever a construction project
that went exactly as planned?
More often, you’re going to have a surprise,
something unexpected – like a mistake in the plans or some site condition that
requires extra work. Anything can go wrong on a job. And the result is nearly always
the same – extra time and higher cost. No contractor is immune from surprises. But
it’s easy to limit the damage when a surprise happens.
Contractors aren’t insurance companies.
You shouldn’t have to make good at your own expense every time something goes wrong
on a job. And you won’t with the right contract. Good contracts allocate risk between
the owner and the contractor. Courts enforce contracts the way they’re written.
If you write the contracts for your jobs, here are seven good ways to avoid losses
from the unexpected.
Make your bid define the job. Describe the materials you plan to install, not the finished
job. For example, if you’re replacing a roof, the bid might show "Remove and replace
18 squares of composition shingles and 80 linear feet of flashing.” If sheathing
has to be replaced (a surprise), that’s at extra cost. Don’t quote a price simply
to “re-roof with composition shingles.” That could be interpreted to include whatever
sheathing is needed.
Exclude specific site conditions. Even the best site inspection isn’t going to uncover every potential
surprise. Your contract should exclude mold, structural pests, hazmat, defective
work by others, subsidence, unsuitable soil, rising water, zoning restrictions,
setback requirements, HOA rules, severe weather and concealed obstructions such
as water, power, waste, drain, communication and gas lines.
Exclude errors in the plans. Mistakes are common in plans and specs. Contractors aren’t licensed
design professionals. You don’t have an obligation to find design flaws. Give notice
when you spot a mistake. Then get an agreement on the cost of extra work.
Narrow interpretation of the plans. If the plans and specs don’t describe some detail or material,
that detail or material is not part of the job. For example, a home plan that omits
the roof is a plan to build a home without a roof.
Changes in the law.
Anything extra required to conform to changes in law, code, ordinance or regulation
is extra work to be done at extra cost.
Be prepared to prove the claim. Avoid disputes that begin “I said. . .” or “You said. . .” Keep
a written record showing extra labor, material and equipment expense. Give the owner
a copy as the extra work is being done.
Set the value of extra work. The contract should identify how charges for extra work will
be calculated. The best choice is your “usual selling price.” The second best option
is the cost of labor and materials plus your usual markup. Payment for extra work
is due when that work is done.
Don’t
take a loss every time there’s a surprise. Cover these seven points in your contracts.
Using Construction Contract Writer makes that easy. The trial version is free.
