Who you hire on your construction project can be as important as your design, materials, or timeline. The people or companies that you bring onboard to do the work can affect the quality, code and regulation adherence, and the durability of the finished product. When hiring contractors, most project leads look for the best contract at the best price. While adhering to your budget is important, there are a few common mistakes you may want to avoid when putting together your team.
Undefined scope of work
The scope of work helps define what the contractor is or is not responsible for, and it can include design and construction specifications. When terms are not adequately evaluated in the contract, it can lead to “gaps” in the scope of work, according to attorneys Frank A. Hess and Richard S. Robinson, who specialize in negotiating construction contracts.
“These problems are amplified in complex, fast-track or design-build projects that often commence with incomplete design/performance specifications and [are also amplified] by ‘design creep,’” the attorneys write in an American Bar Association newsletter.
The owner of the project should take special care to use exact language in the document, because vagueness can benefit the contractor. For example, if the owner doesn’t specify which materials to use, the contractor has the opportunity to use materials that may be cheap or sub-par.
Your best bet? Spell it out. All of it. “In addition to providing information about the property and rooms to be completed, the owner should discuss the quality of the work that should be completed,” says the legal resources website HG.org.
Head `em Off at the Pass: Anticipating Foul-ups on the Construction Site Tweet This
Jumping at the low-ball bid
Beware the contractor who offers a price substantially lower than what other bidders are offering. While there may be a genuine reason for offering discounts, as when a contractor is trying establish himself or herself in a new market, a low-ball bid should raise red flags. “Contractors offering too-good-to-be-true prices not only have the tendency to cut corners and skimp on quality, but are also likely to be more aggressive in terms of matters such as the way they go about claiming payments,” says Rob Buchanan, an engineer as well as a partner in a law firm, speaking with Sourceable.net.
Not reviewing the indemnity clause
To protect himself or herself against judgments resulting from third-party claims against the contractor, the project owner will usually require an indemnification clause in the contract. The range of the clause can be subject to negotiation and should a claim be filed against the contractor, the liability for the incident that prompted the claim will depend on it. Indemnification provisions can offer make-or-break protection to either party. It’s an issue that should be dealt with by lawyers who are familiar not only with terms like “mutual indemnification” (a provision that contractors insert to be able to recover some damages from the owner), and “flow down” (extending indemnification to the actions of subcontractors), but also with the enforceability of such clauses in different states.
Neglecting the retention clause
How do you keep a contractor focused on your job near the end, when he’s already thinking about his next project? Consider adding a provision to hold back a sum of money – often 10 percent of the contract – to ensure that the job is satisfactorily completed. “The goal,” says HG.org, “is to keep the contractor motivated at all stages of the project.” Sometimes there will be unexpected delays that could impact the contractors ability to take on additional work; these situations should be addressed in the scope of work mentioned previously.
Sometimes, no matter how careful you are, you bring on the wrong person or company to work on your project. By making sure the scope of work is defined, taking the time to completely evaluate a low-ball bid, and reviewing the indemnity and retention clauses, you can at least know that you’ve done a lot of the legwork required to properly vet the contractors you bring on board.
Photo Credit: lewis1, Twenty20