“Oh, But I Assumed…”

Owners, have you ever heard, “Oh, but I assumed…” or “Oh, but our bid was based on…” from a contractor?  It’s frustrating, isn’t it?

For some reason, in construction, too many people make too many assumptions that they don’t tell anyone else about.  Everyone does it – architects, consulting engineers, contractors, and yes, owners, too.  But there’s a way to combat this problem, which will decrease an owner’s pain during construction, and will increase the value owners get out of a project.

There are three parts to this simple solution, and the entire project team (owner, architect, and contractor) is involved.

  1. Have good agreements and a good project manual.  (The project manual, which includes the project specifications, is also known as the “specs.”  Sadly, it’s often observed being used as a paperweight or a doorstop in construction trailers.)
  2. Make sure the architect and the construction manager (CM), if a CM is involved, enforce the requirements of the contract documents during construction.
  3. Use the contractor’s payment as leverage to make sure that the requirements of the contract are complied with.  Do not pay the contractor what he is not owed according to the requirements of the contract.  (And make sure that you DO pay the contractor what he IS owed according to the requirements of the contract!)

Good Agreements and Good Project Manual

Owners, you need good owner-architect and owner-contractor agreements, and they need to coordinate with each other, with the conditions of the contract, and with the requirements of the project manual.  AIA documents are commonly used for agreements on private projects and some public projects, and have been time-tested.  The requirements in AIA contracts are usually easily achievable in practice.  Talk to your attorney when preparing the agreements – but make sure you’re talking to an attorney who practices construction law!  (Construction law is a unique animal.  Non-construction lawyers sometimes create uniquely unenforceable construction contracts.)

As the design team prepares the project manual, they must make sure it coordinates with the agreements and the general conditions of the contract.  If the architect mentions that there are some unusual provisions in the agreement or in the general conditions, and suggests that you consider changing them, ask why.  Try to understand the architect’s explanation, and discuss it with your construction law attorney.

Division 01 of the specifications (the general requirements) is a crucial part of the project manual.  Division 01 expands on the provisions of the conditions of the contract.  Division 01 is where you put all those things that people often make incorrect budget-busting assumptions about – whether or not there will be occupants in a building that the contractor will have to work around, whether or not the construction will be phased and the owner will move into part of the construction prior to completion of the entire project, whether or not the owner will have separate contractors on site that the contractor will have to work around (such as a furniture installer).  Making the wrong assumption on important items like these can blow a schedule and can blow a budget, which will make for a tense and unpleasant project.  Owners, don’t assume that the architect automatically knows these requirements of yours.  Don’t assume that the contractor knows these requirements of yours.  Make sure that requirements such as these are in writing in the contract documents.  (The contract documents include the owner-contractor agreement, the general conditions of the contract, supplementary conditions of the contract, the drawings, the specifications, and addenda.)

Owners need to know what’s in Division 01 as well as what’s in the agreements and the general conditions, just as much as architects and contractors do.   Some owners prepare their own Division 01, it’s so important.  Division 01 contains the “rules” for the project during construction, and lists all the procedures for the administration of the project (processes for submittals, pay apps, mockups, testing, operations and maintenance manuals, substitutions, project meetings, construction trailer requirements, record documents, demonstration and training of new equipment, and many other important things).  You do not need to leave these things up to chance and just hope for a good contractor who somehow knows what you are hoping for.  You put these things in the contract.

Enforcement

Enforcing the documents means doing unpleasant things such as not approving submittals until proper documents are submitted, requiring work to be redone at the contractor’s cost if it does not meet the specs, and rejecting pay applications when too much money is asked for compared to the percentage of work actually completed.

The first enforcer is the contractor.  The contractor has to enforce the documents with his subs.  The next line of enforcement is the architect.  The architect has to enforce the documents with the contractor.  As an architect, I’ve worked with “enforcing contractors” and with “non-enforcing contractors.”  “Enforcing contractors” review the subs’ submittals and reject them when they don’t meet the requirements of the specifications – the architect never sees submittals that the contractor thinks aren’t right.  “Non-enforcing contractors” would rather disagree with owners and architects than rock the boat with subcontractors, and sometimes send submittals to the architect that might be so far off, they’ll make everyone scratch his head and wonder if the contractor even looked at the submittal (or at the specs).

Working with a contractor who enforces the documents is much better for an architect and an owner, and much better for a project.  But sometimes there’s not a lot of control over the contractor.  What’s worse for an owner than a “non-enforcing contractor” is a “non-enforcing architect!”  An architect is not being “difficult” or “hard to work with” or “not a team player” if he or she is consistently enforcing the requirements of the contract documents.  That architect is just following the rules, which were set out in Division 01 of the specifications (and remember – the specifications are part of the contract between the owner and the contractor).

Sometimes, architects have to enforce the documents against their own best interests, and sometimes against the financial best interests of the owner.  Owners, please try to understand this.  Under AIA A201-2007, a commonly used form for the general conditions of the contract, during construction, the architect is supposed to interpret the requirements of the contract documents.  Owners, if the architect omitted something from the documents that you had told him or her to include, it’s simply not in the contract between you and the contractor.  It’s not something the contractor owes you for no additional cost.  The problem of the omission is a problem to be discussed between owner and architect.  It’ll probably have to be added to the project, added to the contract, and yes, it’ll probably cost you, the owner, additional money beyond the original contract sum.  This is not a dispute to drag the contractor into – there’s nothing he could have done about it.

The architect who enforces the documents consistently will speak up and interpret the documents fairly, and admit the omissions of his or her firm, if there are any.  Consistent enforcement of the documents by the architect is key to having a smoothly running project.  I believe that it’s easier for contractors to hear about their mistakes, and fix them, when they know that the architect has been honest about his or her own mistakes.   

Payment as Leverage

Owners, you’re not being “mean” if you don’t pay the contractor the full amount requested when the pay application includes work that’s noncompliant with the documents, you’re merely complying with the requirements of your agreement.  Don’t pay for work that’s not in compliance with the documents.  Architects shouldn’t certify pay applications if they’re not certifiable.  (There’s one project in my past that never got certification from my firm on the contractor’s final pay app.  The work wasn’t complete.  I didn’t approve it; nobody from my office approved it.  The owner paid the final payment to the contractor anyway, and lost leverage to get the punch list items completed, and may have taken on some liability that the architect might have otherwise had.)

Don’t Make Assumptions!

Write down all your assumptions!  Discuss them with the architect, even if you already have standard published requirements that are supposed to go in Division 01, as many public agencies do.  Put them in writing, as part of the contract, whether they belong in Division 01, or in the conditions of the contract, or in the owner-contractor agreement.  Once they’re in the contract, they’re no longer just assumptions.  They’re contract requirements.

Make sure they’re enforced.

Support the architect, who is in the weird position of having to be the neutral enforcer of the contract.  Architects have to be as hard on themselves as they are on the contractor – it’s an awkward position to be in, but they can’t be defensive about the documents, they have to enforce the contract.

Owners, back up the architect’s enforcement of the contract with payment for compliant work and with non-payment for non-compliant work.

Those are the rules!

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