Pete's latest form.

We had a great response from readers requesting a copy of the daily log form. I agree that using a form is a very simple method of collecting information and using that information to everyone's benefit.

As you may remember, a deficiency form is another simple form for our field supervision or project managers to fill out and pass on to the general contractor when we notice conditions that may result in added liability.

The main objective of using a deficiency notice form is to limit our liability and improve communication between the general contractor and subcontractor. Many GCs believe it is better to "not know" what problems exist. I believe the main reason they prefer not wanting to know is because contractually if we advise them of a deficiency it becomes their responsibility. If we don't advise them of a deficiency, the deficiency is generally our responsibility.

Once we sign a contract, we are bound to the terms and conditions of the subcontract, as well as the main contract between the owner and GC along with plans, specifications and addendums.

Most contracts and specifications require subcontractors to notify the general contractor or architect of any unsuitable condition prior to the commencement of our work. The GCs contract language may read something like this:

o Prior to starting work, subcontractor will carefully inspect installed work of other trades and verify that such work is complete to the point where work of this section may properly commence.

o Subcontractor will notify the architect in writing of conditions detrimental to the proper and timely completion of the work.

o Subcontractor will not begin work until all unsatisfactory conditions are resolved. Beginning work constitutes acceptance of site conditions and responsibility for defective installation caused by prior observable conditions.

No big deal?

Subcontractors may look at this language as "no big deal" or they may say, "I don't have time to inspect some other trade's work." If you are looking at the language in this way you are missing a great opportunity!

First consider how powerful the language is. It clearly requires us to inspect and verify that prior work is complete before we begin working. It also advises us to notify the architect if we find any "detrimental" conditions. Finally, it plainly tells us that if we don't do these things, we will be held responsible.

Have you ever said to a building inspector, "Sir, when you inspect our drywall, would you be sure to let me know of any infractions or imperfections because I want to make sure we are installing the drywall perfectly?" I doubt you would ask such a thing.

The silver lining or the opportunity for us is that the contract requires us to notify the GC or architect of unsuitable or detrimental conditions. They are begging us to bring a problem to their attention! Why don't we?

We may not because we don't want to be slowed down, or it may be that we don't take our job as inspectors seriously enough. It is obvious that we don't understand the opportunity we are given to limit our liability.

General contractors do not like subcontractors to write letters, or give notices to which they must respond. Normally, GCs prefer that you just talk to them about a problem. Talking is good, however, liability issues require documentation.

Our notice has some real teeth when considering the fact that we are contractually obligated to make these notifications. We have two choices: either make the notifications or accept the liability in not doing so.

Since subcontractors perform the majority of the work on a given project you would think we would be more attentive to issues of liability. For example, when a building leaks, causing damage to the interior and exterior of a building, as well as allowing mold and mildew to grow, the liability not only extends to the correction of the problem, but also to the loss of use of the building and everything associated with that.

We do all the work and we assume the majority of the liability. Do we make any more money for assuming the liability? Does our assumption of this liability cost us money? Let's put it this way: The contract documents being used today have been very affective in spreading out the liability throughout each sub trade. From a GC perspective, contract documents are doing exactly what they were intended to do.

There is power in a deficiency notice

A deficiency notice is something that I believe throws a monkey wrench into contract documents. It changes the dynamics of our contractual obligations when we advise the GC of a detrimental condition. It should change the way attorneys and judges look at our obligations. In my mind's eyes, I can see an attorney sifting through hundreds of deficiency notices wondering how he can defend his client. Whereas I see our insurance companies looking at these subcontractors who sent in deficiency notices as heroes.

I believe a deficiency notice will affect the GC, architect and owner's position of liability if we will take advantage of this opportunity. In addition, we may be able to use a deficiency notice for other issues we want to be of record. I see no reason why we cannot use the form to document other issues including loss of production due to sequencing or documenting schedule delays.

What kind of response can we expect from GCs once they receive our deficiency notice? In most cases they will say it is not necessary to send these notices and that they would prefer us to bring up these problems in person or at sub meetings. I suggest we do talk to them in person and discuss the problem at sub meetings. However, I also think it is vitally important to follow up with a written notice.

Our insurance companies need hard evidence in order to defend us. If we don't have hard evidence indicating we should be dismissed from a claim, have we done our jobs? We most definitely have let our employers and our insurance companies down by not following our contractual obligation of notification.

If our insurance companies excluded coverage for those contractors who knowingly proceeded with their work over work that was previously done in a defective or detrimental manner, could you imagine the impact? Most claims would not be paid and the subcontractor would most likely be defending himself. An ugly proposition!

We need a systematic method of limiting our liability, and I've not been able to come up with a better idea than a deficiency notice. The construction industry as a whole is about shifting liability. It's similar to a game of chess where each move you make squeezes your competitor into a retreat mode. A retreat can be productive if we at some point come up with a game plan that is fair and balanced. Until contracts are fair and equally balanced, I think it is important for us to take advantage of every opportunity we are given to limit our liability.

On page 83 is a blank form you may copy and use. You may also e-mail for a copy of this form or find it on the Walls & Ceilings Web site, A sample completed form is on the site, too.

I have tried to make the form casual but how you fill out the form will set the tone of the communication. Feel free to use it as is or make changes. I welcome your suggestion and ideas.

Remember: teamwork begins with a fair contract!

Click here to download a pdf document of this article's accompanying form,"Job Condition Notification Memo"
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