Pete ode's to a friend and discussion on how ambiguous contract language requires more than a dictionary.

Twenty-five years ago, I was a cub estimator working for a Seattle-area plastering and drywall contractor. I shared an office with my mentor who was one of the three owners. John M. Pinto was the person who taught me to read plans, specifications and contracts, as well as everything else an estimator should learn.

John was an authority on plastering, fireproofing, load-bearing metal studs and prefab panels. People in the industry came to John for advice, which he gladly gave. John was a patient man who thoroughly answered my many questions and had a quality about him that caused me to listen intently to what he had to say. I've never known an individual like him and most likely never will again. John passed away July 22, 2001, and is greatly missed by his family, friends and by me!

John took a chance on me, a young Sheetrocker who knew nothing about estimating or reading blueprints. John and I talked about many things but never did I hear him talk about the huge insurance claims and lawsuits that plague the construction industry today.

Are these lawsuits the result of the new products or methods we use? Could it be the depletion of the ozone layer, which causes harmful ultraviolet rays to attack the cladding of a building? I don't think so!

Use your head

John would say, "The problem is the result of people who are so busy trying to make a buck they throw common sense out the window hoping it won't land on them.?"

Insurance claims and lawsuits have landed hard on many subcontractors, and since we have allowed ourselves to sign contracts containing language that overburdens us with liability, we must begin to deflect that liability to where it came from. The result of all those settled claims is increased insurance premiums or the inability to get coverage at all.

What can you as a subcontractor do to reduce the cost of liability insurance? One way is to have a zero-claim-tolerance plan. Develop a plan within your company that will reduce the amount of claims you have to zero. A zero-claim plan would be no different from a safety or fall protection plan.

The plan should affect the bid process, as well as the contract process. The plan should specifically address field issues.

A zero-claim-tolerance plan--if you implement it--could have a tremendous affect on claim reduction if you make the plan simple and concise. As part of that plan I believe a simple form which you might call a deficiency notice could revolutionize your relationship with your insurance company. I know many of you send letters to the general contractors advising them of conditions that concern you. A deficiency notice should be more than that. It must have some teeth!

This form may revolutionize your relationships with GCs, architects and owners by deflecting liability from you to them.

A deficiency notice is a form that allows a superintendent or foreman to notify the GC in writing of a specific condition that may affect work now or in the future on a daily basis! You may want to notify the GC of flashing issues, caulking issues, water pooling or improper installation of a window. You can use the form for life safety issues, as well. Use it for plumbing or electrical improperly supported or improperly isolated, which may result in sound transmission problems.

The key in using a form like this is to be specific as to what the problem is and where it is. It should also be made clear that you noticed the problem prior to its being concealed, therefore making it accessible for correction.

The issued notice should also indicate what could happen now or in the future if the problem is not corrected. You may be thinking that you don't want your people to become inspectors. You may not want to be an inspector. However, most contracts contain language that requires you to inspect.

Contractors' jargon

Most specifications and contracts contain language that requires reporting any unsuitable condition prior to performing the work. Most specifications indicate that proceeding with your work means accepting the work done previous to yours.

Include in your deficiency notice language like: "This notice is sent to you in advance of the completion or concealing of the problem described above. We shall therefore not be responsible for the resulting damage this condition may cause now or in the future if not corrected. Please take necessary steps to correct this problem. Advise us in writing as to your determination with direction."

Once you implement a zero-claim-tolerance plan, use that plan as you do a safety plan. Include all employees! Many of you have invested in safety and the payoff has been great. Now you must start investing in a zero-claim-tolerance plan.

I look at my insurance agent and insurance company as a vital part of my business. I could not imagine doing business without insurance. I think we would call it Russian roulette if we dare try it.

It's not all about me or all about you! It's about our industry as a whole. Insurance is a part of our industry and we should do our best to help our insurance companies be successful.

I feel confident that a deficiency notice will prove to be effective in limiting liability. Discuss the idea with an insurance agent and attorney. In the event of legal action, I don't think a judge could ignore the many written warnings to the GC.

I remember John Pinto sitting at his desk with opera music playing (which I learned to enjoy), hacking up a subcontract while laughing at some of the contract language. He would spot something and ask me, "Pete, what do you think would happen if this occurred?" We would go back and forth until he had me in a corner with no way out except to see his point. He was teaching and making it fun!

John was a master of independent thinking, or as I call it, critical thinking. I think John would approve of a deficiency notice form because it is sensible! A casual, non-offensive form indicating the facts may be just the ticket to limit liability.

Remember! Teamwork begins with a fair contract!