When
was the last time you had a pleasant surprise on a construction project – something that cost less than estimated or was easier than expected? It’s probably been a while.
Most surprises are bad news – extra work
and higher cost.
If you know a way to eliminate surprises,
congratulations. You’ve got a rare gift. The rest of us have to deal with the unexpected.
And that’s what I’m going to explain.
First, understand that construction companies
are not insurance companies. Nothing in the law requires contractors to absorb the
loss when there’s a surprise on the job. An example will make this clear.
Yesterday I took a question from a solar
contractor. He bid a roof-top PV solar system for a church and got the job. So far,
so good. Then came the surprise. On closer inspection, the existing roof was fragile
mission tile -- pans and caps, not sturdy s-shaped Spanish tile. The salesman didn’t
notice that when selling the job. After closer inspection, the contractor called
the owner and explained the problem. Installing solar panels was going to break
a lot of those fragile tile. The roof would probably leak. Better to re-roof the
affected area with sturdy Spanish tile before installing the collector panels. The
extra cost for re-roofing would be something north of $10,000.
Oops! The owner wouldn’t budge. He insisted
that the contract was valid and enforceable as written. He was going to sue if work
wasn’t done at the contract price.
What would you do? Re-roof and eat the
$10,000? Install over mission tile and hope for the best? Walk away and let the
lawyers slug it out?
I’m going to leave the answer to your
best judgment. But I’m going to explain how to avoid losses and acrimony like this
when there’s a surprise.
Differing Site Conditions
Just about every contract for public
works construction includes a “differing site conditions” clause. If site conditions
(such as the roof surface or substrate) aren’t as expected, the contractor gets
a change order and an equitable adjustment in the contract price. A differing site
conditions clause is considered a benefit to both the owner and the contractor.
Contractors can bid based on what’s most likely, not the worst case. Government
agencies get more competitive bids.
What’s good for public works projects
is perfect for renovation, repair and improvement jobs. Expect surprises. Explain
in your bid exactly what you expect on the job – in this case, installation over
Spanish tile supported by a suitable substrate. Then be sure your contract has a
differing site conditions clause. That settles it. No dispute. No lawyers needed.
A satisfied customer.
A contract for renovation, repair or improvement work that doesn’t include a differing site conditions clause is an accident waiting to happen. Don’t get caught
when there's a surprise. Construction Contract Writer has a good selection of differing
site conditions clauses. Select the contract language that offers the best protection
on your jobs. The trial version is free.
