All in Agreement
On Top of Construction's Mt. Sinai
1. All agreements shalt be in writing.
2. Thou shalt read all agreements before signing them.
3. Thou shalt proceed with added work in writing.
4. Thou shalt have adequate insurance.
5. Thou shalt have acceptable payment terms.
6. Thou shalt not allow lien rights to expire.
7. Thou shalt notify customer when delayed.
8. Thou shalt perform thy work in a proper sequence.
9. Thou shalt keep a daily log.
10. Thou shalt work safely.
1 All agreements in writing: If your customer is unwilling to put an agreement in writing, walk away. Things happen and people move on. Verbal agreements are more difficult to resolve than written agreements.
2 Read the agreement: Take time to read the agreements you sign. Make sure you understand what you are signing before you sign it. If you don't understand, get help!
3 Added work: Performing additional work without being directed to do so in writing is a formula for failure. It's easier to get written direction to proceed prior to doing the work than it is after the work is done.
4 Adequate insurance: Not having adequate insurance coverage is like wearing a target on your back. If you don't know if your insurance is adequate, get help!
5 Payment terms: Written agreements should contain specific payment terms. If your agreement does not have specific payment terms or terms you can live with; negotiate terms that work for you!
6 Lien rights: Most states have lien laws, which are designed to protect subcontractors. The law may vary from state to state. However, it is your responsibility to know the lien law in your state. Your right to lien for non-payment is guaranteed by law and should not be taken lightly.
7 Delay notification: The opportunity to nicely notify your customer of delays is your responsibility. Most contracts require you to do so. It's good business and it pays off when a job is not completed on time.
8 Proper sequence: Do the work in the sequence you bid the work and in the sequence it should be done so as to maximize profits. Don't let your customer jump you around. Improper sequencing of your work is a production killer.
9 Daily log: A daily log is simply a record of what's happening on the job on a daily basis. It should be a simple form that is filled out by the supervisor. The purpose of the log is to support any claim you may seek for additional compensation or additional time, as well as support you in the event a claim is brought against your company.
10 Work safely: All subcontractors should have a basic safety plan. The owner should emphasize safety to all employees. A good safety record will make you money.
11 The Eleventh Commandment: There was a time when customers would ask us to provide design help. We would submit a detail or make a suggestion that would achieve the customers design goal. We offered this service because it would normally make our job easier. Offering written design changes today can be used against you.
Subs not arcsSubcontractors are not architects or designers. We are subcontractors who build projects using the design created by the owner/architect/engineer. It's important for subcontractors to realize that most architects and engineers provide limited liability insurance. Architects and engineers normally bid projects just like subcontractors.
Once an owner selects a design team, he or she enters into a contract with the architect. The architects design contract identifies the limits of the architect's liability insurance. Unless specifically requested by the owner, most architects and engineers have minimal liability limits. I've seen limits as low as $50,000. The contracts make it very clear that under no circumstances shall the architect be liable for more than the limits outlined in the contract between the owner and architect.
Generally, subcontractors are required to carry anywhere from $500,000 to a couple million dollars in liability insurance. There are not set limits for architects and engineers. If an owner wants an architect to provide $2 million worth of liability insurance, the architect will either add the cost of insurance to his quote, or tell the owner he cannot or will not provide that level of coverage.
Think about it: If an architect has a maximum of $50,000 in liability insurance, why in the world would you want to provide design services that could end up affecting your million-dollar insurance limits?
There is a big difference between identifying potential problems with an architect's design and providing design services. Stucco contractors deal with flashing details all the time. A stucco contractor who notifies their customer of "potential" water intrusion problems due to the design is simply suggesting that the customer look at a "potential" problem and correct it. The customer has every right to ignore the stucco contractor's suggestion.
If you choose to assist the architect/owner in designing a project or in the design of certain details, you should have an attorney create a strong disclaimer statement. For example, "Design assistance provided by our company are suggestions only and are not to be incorporated into the design of this or any other project. Any and all liability resulting from the use of our design suggestions is the responsibility of the owner, architect and engineer."
Avoid communication meltdown12 Twelfth Commandment: Lack of communication with the customer is a widespread problem. When you bid a job you bid a specific scope of work and it's critically important that your contract matches your scope of work. Since GCs are beginning to use what I call "new generation" contracts, it is more important than ever to make sure your contract limits you to the work you bid.
New generation contracts will identify your scope of work, as well as related work that is normally done by the GC or someone else. The GC's goal is to write an "all-inclusive" subcontract to every sub on the job. The GC is then better protected from "holes" that could become the GC's responsibility.
You may think your contract scope of work is clearly identified; however, another part of the subcontract may make you responsible for items embedded in concrete, which either supports or attaches to your work. New generation contracts may indicate that you are responsible for locating/layout of items embedded in concrete that either supports or attaches to your work.
As well, new generation contracts may require you to complete the work to the "total satisfaction of the owner/architect and GC." I see this "total satisfaction" comment on many contracts today. "Total satisfaction" should be crossed out and replaced with the words "per plans and specifications." How do we judge a person's total satisfaction? What if the architect and owner are satisfied but the GC is not? One person's satisfaction is another person's dissatisfaction. The "satisfaction" clause is just another escape route an owner, architect or GC can take if they need it for any reason whatsoever.
New generation contracts will lead you like a duck hunter leads a duck. You think you see your scope of work clearly defined but it's not, because new generation contracts tie all parts of the contract together and they always clearly state that the "most stringent requirements of the subcontract shall apply." These contracts use words like "related to your work" or "associated with your work" and "normally included in your work." In essence, these new contracts will require you to perform the scope of work you bid, as well as any related or associated work and anything that is normally included in your work.
It is my understanding that in order for a court of law to find a contract enforceable, the parties must have entered into a definite agreement. When terms are not definite, the contract may not be deemed enforceable. New generation contracts are not only definite they definitely expand the subcontractors' scope of work. I believe a court would rule in favor of GCs who use new generation contracts.
Thou shall limit contracts to the scope of work bid is the Twelfth Commandment.
Remember: Teamwork begins with a fair contract!