What Did We Learn About Substitutions?

January’s Panel Discussion on Substitutions at the Denver Chapter CSI meeting included an owner’s rep, a general contractor, a subcontractor, an architecture firm’s construction contract administrator, and a specifier. Here’s some of what we learned.

Many owners welcome substitutions.

The biggest divergence of opinions was about owners’ positions on substitutions. The loud and clear message from the owner’s rep was that owners welcome substitutions, and that many are frustrated with architects’ and specifiers’ reluctance to entertain substitutions. In the eyes of the owner’s rep, there are two crucial things – cost and schedule. Since time is money in construction, schedule is very important to owners, so even a substitution that costs more money but saves time is likely to be favorably received by an owner. Owners wish that more architects and specifiers understood the overall impact of substitutions, time- and money- wise. (It’s important to note that the owner’s rep on the panel primarily represents developers, and recent projects have been multifamily residential projects.)

The specifier pointed out that for private work, substitutions can be good because they give the design team an opportunity to evaluate things they may not have evaluated when they first prepared the documents.

The subcontractor thinks that substitutions are an opportunity for the owner to get a better value. With the developments and changes in products and assemblies that happen all the time, architects and specifiers can’t keep up. Subcontractors, who are specialists in their areas, can keep up, and may be able to offer better solutions.

But some owners don’t want substitutions.

The specifier reminded us that many owners, especially in the public sector, want what they know has worked, and do not want substitutions. Owners such as municipalities, public school districts, and universities may own and maintain many buildings, and need maintenance procedures to be the same from building to building. Public owners’ requirements are sometimes outdated, however, and the specifier does not always have the opportunity to explain to the owner that several of their listed acceptable manufacturers no longer exist.

Substitutions scare architects.

Substitutions scare architects, and for good reason. They spend a lot of time designing around a particular product – that’s why that particular product is specified. Architects worry about how many details in the drawings will be affected – and will no longer be correct – because of a particular substitution. During the months-long design process, design decisions are followed all the way through everything that’s affected by them. There’s often no time to go back and do this again during construction. And when design changes have to be made due to a substitution, it is hard to be sure one has gone back and checked every possible thing that could be affected, as was done when the design was first developed. This is not only due to time constraints, it’s also because this is not how the design process naturally flows.

Architects also wonder if the owner is getting something of a lesser value on the project when a substitution has been accepted because the owner was attracted to cost savings. The architect knows that the owner is happy to be getting something cheaper, but the architect worries that the owner is giving up something of greater value or performance (the specified item), and the general contractor or subcontractor is the one actually saving more money on the substitution.

People have different ideas about what a substitution is.

Panelists agreed that different team members on a design and construction project do not agree about exactly what a substitution is. The general contractor pointed out that team members treat substitutions differently depending on the project delivery method. Substitutions are treated differently on hard bid (design-bid-build), negotiated (construction-manager-at-risk or construction manager/general contractor), and design-build projects.

The general contractor doesn’t want to receive substitutions submitted by subs on hard bid (design-bid-build) projects, because they are usually submitted to the general contractor without enough time to get them approved by the architect prior to the bid. The general contractor then has to decide whether or not to use the price associated with that substitution. If the general contractor is not the low bidder, it doesn’t matter, so there’s an incentive to use the price associated with an unapproved substitution. But if he uses that number and then the substitution is not accepted when submitted to the architect after the bid, he’s losing money.

On negotiated projects, the general contractor wants to see substitutions, get pricing, explain to the owner and the architect that if this product is used instead of a specified product, the owner can save money, or the schedule can be shortened. There’s more of a collaborative effort on negotiated projects.

The specifier (of course) read us the definition of a substitution from MasterSpec. It’s vague. Most of the industry probably agrees that “the devil is in the details” on this issue. We agree that a substitution is a change, but what kind of a change, and how a substitution is supposed to be evaluated, are where the differences of opinion and misunderstandings occur. The owner and design team need to define how casual or formal the process for evaluating substitution requests is. The specifier believes that part of his job is to define that evaluation process succinctly.

For better or worse, “or equal” is flexible.

The owner’s rep doesn’t mind the phrase “or equal” at all. Owners are looking for general contractors who are willing to “turn stones” and look for better options, and the phrase “or equal” in the specs allows for more possibilities.

The contractor says that “or equal” in a spec gives them more flexibility to look at the possibility of using an unspecified product in the bid.

Architects do not like the phrase “or equal” because it is open to multiple interpretations. There’s a lot of information that needs to be evaluated to see if something that is submitted is actually equal, so if someone submits on an “equal” that is not listed in the specs, this contract administrator asks for a substitution request.

The subcontractor likes the phrase even less than architects. He described it as two words in a specification that make subcontractors want to turn away and run as fast as they can in another direction. He thinks that if an architect goes through the exercise of heavily specifying one product that there isn’t an “equal” to that. He described “or equal” as a “cop-out” that allows way too much flexibility. (How is a sub supposed to know what is considered to be equal?)

The specifier does not use “or equal” in his specs, because the phrase is full of uncertainties. “Or equal… determined by whom?” he asked. He believes that the only equal to a product is the next product on the assembly line of the manufacturer who’s making it. “Equal” is too strict a term to be put out there to be determined by anybody. The specifier prefers a phrase like “Alternatives are welcome to be presented” along with a statement about who approves the alternatives. He believes it’s a more honest way to evaluate alternatives.

We got an interesting question at the end of the panel discussion from a chapter member about “or equal” and public work. Some government owners require that “or equal” be added to a list of products or manufacturers. We discussed different ways to define “or equal” in the construction documents, and procedures for evaluation. Some government entities do not actually define “equal,” or give any guidelines for procedures to evaluate “equals,” but still require that the phrase be included.

We’re not sure about “no substitutions.”

The owner’s rep would never advise an owner to require “no substitutions” in the spec.

When asked how much pricing is affected when competition is limited by specifying “no substitutions,” the general contractor responded that the problem is that you don’t know. The suspicion is that higher pricing does result when there’s no competition.  We’re in a competitive environment, and if someone is sole sourced, they may take advantage of that and bump up their price.

In the subcontractor’s experience, typically an owner doesn’t end up with higher prices when a sole source with no substitutions is specified. For curtainwall, pricing is only given to select vendors, and some can provide better pricing than others in bids, but their numbers probably won’t change based on how many manufacturers are named. Separate from the pricing issue is a service issue; the subcontractor mentioned that some vendors may have more leverage to get replacement products out on the jobsite faster than others.

The earlier a substitution request is made, the better.

Everyone generally agreed that the earlier a substitution request is made, the better.

The specifier pointed out that procedural requirements for substitutions that happen prior to the bid are not part of the contract documents – they’re part of the instructions to bidders. In these cases, approved substitutions are no longer substitutions at the time the contract is signed – they become part of the contract. Procedural requirements for substitutions that happen after the bid are part of the contract documents.  Also, substitutions that happen after the bid are divided into substitutions for cause and substitutions for convenience – requests for substitutions for cause are submitted when things are not available, manufacturers don’t make something anymore, etc. MasterSpec specifications software suggests that all substitutions for convenience should be received within a certain number of days after the construction contract is signed.

The owner’s rep’s projects typically have negotiated contracts, so don’t have hard bid dates. He said that as long as substitutions are decided upon prior to signing the contract, substitutions are fine.

The general contractor believes it’s best to require substitution requests to be submitted prior to the bid, but from a practical standpoint, it makes sense to accept some substitutions after the bid.

The architect’s contract administrator sounded somewhat resigned as she said that substitutions are going to happen before, and after, the contract is signed. It’s better to receive the substitution requests at the right time, before the bid. But even more important than timing is that the general contractor should actually review the substitution request before sending it on to architect (and not just stamp it and pass it on without actually reviewing it).

The subcontractor thinks that it’s good to receive substitution requests during and after the bidding process, because the project benefits from time for the team to collaborate. The best results, best pricing, best performance, best product can come out of collaboration. Any other way is subjective – just one person’s opinion. The project can get to a higher level with collaboration, with everybody involved.

Can we eliminate the substitution process?

A guest attending the meeting asked how we get rid of this substitution process. The subcontractor on the panel said that the only way to get rid of the substitution process is to write performance specifications instead of specifying products, manufacturers, or descriptions that point to specific manufacturers.

CSI’s Construction Specifications Practice Guide defines a performance specification as “a statement of required results with criteria for verifying compliance, but without unnecessary limitations on the methods for achieving the required results.” The book cautions that “an incomplete performance specification results in a major loss of quality control over the materials, equipment, and workmanship going into a project.” The criteria for verifying compliance need to be “capable of measurement, test, evaluation, or other acceptable assurances.”

In performance specifying, no products, manufacturers, or installation requirements are specified. Anything that can meet the required results, and whose compliance with the required results can be verified, meets the spec. In performance specifying, although a product is not named in the spec, it meets the spec if it meets the required results indicated in the spec. Even though it’s not named, a substitution request is not necessary.

Performance specifying transfers some design duties and control from the design team to the contractor team. It allows many more options to be presented to the general contractor. It takes some control away from the architect and the owner – if they don’t like the way something looks, they may not be able to point to the spec and say that something doesn’t meet the spec. If it performs the way the performance specification requires, it meets the specification, and cannot be rejected without a change order.

Thank you to the panelists: Tom DeBerard of DAE Construction Services, Stan Ward of Ward Construction, George Feathers III, currently of Curtain Wall Design & Consulting, Inc., Morayma Salas of Cuningham Group, and David Bishton of Construction Rx, LLC.

7 thoughts on “What Did We Learn About Substitutions?

  1. Liz, thanks so much for this summary of the issues and most importantly, telling us in very clear language that each of the different parties has a very different view of the situation. That should be taken very seriously. Each parties perspective is the correct perspective and needs to be fully understood. Each party is looking to understand how to provide real value while managing their risks.

    It should be very revealing to many specifiers that there are owners who welcome substitutions that decrease their overall costs and scheduling difficulties. Owners care a lot less than is often represented by architects about keeping things looking a particular way. The consistent view of many specifiers and architects that they are somehow protecting the owner by protecting the design intent is not meaningfully responsive to the cost and schedule issues. It is probably time to give up on the “we are protecting the owner by enforcing our design intent” with “lets actually figure out what is important to the owner (public or private)”. Glad to see that more and more conversations are taking place in the CSI outside the echo chamber and with the other parties. Now it is time to take the views of these other parties seriously and help them provide specifiers and the CSI to create a different basis for participating in the whole process by keeping the owner’s needs first.

    • Ujjval, thanks so much for reading and commenting.
      The panel discussion was definitely an eye-opening peek into the preferences of others on the team, particularly owners, for me.
      Part of the anxiety of architects about substitutions comes from substitution requests (for substitutions for convenience) that are submitted AFTER the contract is signed. These can make the design team feel as if the party who will be getting the most out of a substitution is the sub or the GC – NOT the owner.
      For all his pro-substitution positions, the owner’s rep on the panel was very clear that substitutions need to be decided upon BEFORE the contract is signed.
      That should be easy, especially with all the CM-at-Risk projects so many of us have these days. But even on negotiated projects, I still occasionally see substitution requests and arguments, way after the contract is signed, for things that had been in the documents (in the specs) WAY BEFORE the contract was signed. These seem to be the substitutions no one really likes. Yet somehow they sometimes make their way through the GC to the architect and on to me.

  2. Great summary Liz, and a very good discussion. Two thoughts: 1) I think the attitude and responses by non-architect panelists reveals very clearly the reduced respect architects now have in the construction process. As I have said in other posts, due to poor training in technical aspects of construction and externally applied time constraints, this is not an unjustified attitude in my opinion. 2) The discussion did not seem to discuss compensation to the architect for the inordinate amount of time substitution requests require if properly evaluated. Architect’s fees, tho not recognized as very low by most clients and not by contractors, are terribly low compared to other professions. To be fair, substitution request evaluation during and after bidding should be compensated hourly as additional services.

    • Great points, Marty.
      You’re right – in the discussion we didn’t talk about the time/fee needed for architects to review substitution requests, and that needs to be part of the equation.
      This means that the time for the architect to ask the owner about what they want substitution request procedures to be is NOT when the specifier asks the architect during DD or CD phase, but much earlier, when negotiating the owner-architect agreement.

    • Most specs we see include some language about cost of substitution, re-engineering, re-submittal etc… shall be borne by the substituting party. Every substation I’ve ever faced (I’m a rep and my product is usually the specified product) there hasn’t been a single architect who has made the GC or the low bid or equal sub pay for their time to review the substitution. If my competitors had to pay the spec writer or architect $50-100/hr to review the substitution pre-bid… I wouldn’t have any competitors. They’d go bid other work.

  3. Very informative article, in that it addresses real project situations from different points of view, somewhat in “Rashomon”-style.

    We are looking at addressing in our template section 01 6000 the case of “substitution for cause” (a discontinued product) made after any otherwise reasonable time period for substitutions has expired. In this circumstance, is there ever a reason to forbid a contractor from submitting a substitution request? Consider the case of only one product named in the technical section v. the case of several products. Comments and thoughts are welcome. Thank you.

    • Thanks, Walter. I can’t think of a reason to forbid a request for a substitution for cause even at a late date during construction. It’s not “for cause” if only one of 3 named products is discontinued, unless maybe if it’s a public project and the product was discontinued before the bid. We can’t get blood from a stone, so if the specified products are discontinued, we need, at any time during construction, a process to review what’s proposed.
      Any other thoughts out there?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s