My son successfully completed driver’s training and passed the state-required testing in order to receive his driver’s license. He believes it is unfair that I have placed limits on his driving when the state has not. After driving with a permit for a year and then passing all the state tests, I can understand his disappointment. I feel a similar disappointment when I sign
a sub-contract.
After 20 years as a commercial drywall contractor, I have concluded that we as sub-contractors face unfair conditions, which we accept as normal. Very few of us will make any waves when faced with situations that cost us money or place additional liability upon us. But by focusing on four critical areas, I believe we can find success.
Contracts
The contract is nothing more than a tool that the general contractor and the owner use to protect them and shift liability to others. Have you ever seen a sub-contract written in favor of the sub-contractor?Do you read every word before you sign the contract? I am not saying that every part of the sub-contract is unfair but I am saying that the big issues are not fair. For example, the paid-when-paid clause simply means the general contractor does not have to pay you until he or she is paid from the owner. Do you have that same agreement with your suppliers?
Among the unfair contractual obligations we accept are:
1. Indemnity agreements.
2. Claim processes.
3. Liquidated damages.
4. Third-party claim issues.
5. Change order processes.
6. Change order directives.
How do we level the playing field so the contracts we sign are fairer from a sub-contractor perspective?
1. Find a qualified construction
attorney.
2. Get a copy of your contract and
main contract to the attorney.
3. Have the attorney review and revise
the contract to his or her liking
using red ink.
4. After you receive the attorney’s
changes, review over the phone
those items you do not understand.
5. Decide which of the attorney’s
changes you want to incorporate
into the original contract.
6. Make the changes!
When submitting your bid, you may note that your bid is conditioned upon the use of a particular sub-contract form. Form A401 is the most fair sub-contract form I have seen or used.
Schedules
The general contractor designs the schedule, is given a completion date by the owner, and the general works that date backward, forward and sideways until all the work fits between the start date and the finish date.The only way to develop a fair schedule is for the general contractor to allow sub-contractor input. Sub-contractors must know how much time they have to complete their work before signing the contract.
Other ideas you may want to consider when dealing with schedules include:
1. Make your quote subject to an
acceptable schedule.
2. Once you are awarded the job, send
a letter to the general contractor
letting him or her know how
much time you need to perform
your work. Give the contractor
your suggested work activities
and durations so he or she
can easily fit them into a
schedule that benefits you.
3. Always request and retain the
original schedule and request
and retain all updates. Review
all of the revisions as soon as
you get them to see if any of
your activities or durations have
changed or if other trades’ work
will now be stacked onto yours,
and if you can still perform the
activities within the time you
are now allotted.
4. If the general contractor does
not allow you enough time,
advise in writing.
5. If you find the job is behind
schedule, find out why and
advise the general contractor delays are affecting your
completion date. Make note of
all schedule delays and forward
that information to the general
contractor. Have your foreman
complete daily diary entries
about all impacts or delays. If
you trust his or her judgment,
have him or her estimate how
much time or efficiency was lost
that day due to the impacts.
6. Over-man a job or work over
time only if you have delayed
the job. You are not responsible
for delays caused by others!
7. Think critically!
Money
Let’s face it: The owner and general contractor have your money. Because they have your money, they have control.Money makes people do strange things. The superintendent, project manager, owner, architect and other sub-contractors want to save as much money as possible. It could mean a bonus for the superintendent if the job finishes under budget. Who knows? Maybe the project manager gets a bonus also. Maybe some of the sub-contractors are on bonus programs that could affect your sequence of work.
The deck is really stacked against the sub-contractor when one considers the payment language contained in the sub-contract and the main contract.
This applies to sub-contracting. Your material and labor are the same as lending dollars. As sub-contractors, we sign unfair sub-contracts agreeing to unfair terms and finance the job until paid in full.
To effectively control the money:
1. Revise contract payment
language with your attorney’s help.
2. Know the financial condition of
the owner and general contractor.
3. Know the lien laws and
especially the time frames in
which liens must be filed.
4. Find out who is financing the
project. Call them with any
concerns.
5. If your payments are slow, call
the owner and find out why.
6. Keep track of late payments and
slow change orders so you can
determine your interest costs.
7. Send the contractor a bill for
interest on late payments and
slow change orders.
8. Never allow your lien rights to
run out! If your work is
complete and you have not been
paid in full, lien the job before
your lien rights expire!
9. Add contract language that
requires change orders be
processed within a reasonable
amount of time (30 to 60 days)
and if they are not
processed in a reasonable
amount of time, you are not
obligated to perform
change-order work.
General contractors and owners reading this article may consider my approach to sub-contracting combative, demanding or self serving and they would be right to a degree. However, take those seasoned contractors or owners and make them sub-contractors. Make them sign unfair sub-contracts and wait for their money, give them change orders, and see how they respond.
The reason you don’t see general contractor management staff become sub-contractors is they know how low sub-contractors are on the food chain, and they know how one sided sub-contracts are. They normally go into development or something closer to the money.
Until we have fair contracts and equal rights in contracting, we must think critically to find ways to level the playing field as sub-contractors.
