By Steve Rizer
There are several steps that subcontractors should take if they want to maintain their rights to file delay claims, Navigant Construction Forum Executive Director James Zack said during a webinar that WPL Publishing held earlier this month. Zack and Navigant Consulting Inc. Associate Director Thomas Peters offered their advice on subcontractor delay claims to a target audience of subcontractors, contractors, public and private owners, construction managers, consultants, architects, engineers, and construction law attorneys.
Subcontractors seeking to maintain their rights to file delay claims “need to perform adequate pre-bid site investigations, carefully review subcontract and flowed-down prime contract documents, [and] negotiate away or modify the no-damages-for-delay and the pay-when-paid or pay-if-paid clauses,” Zack said. “They need to learn their rights and obligations, and they need to avoid unbalancing the bids so that they can just stay away from that argument.”
Furthermore, subcontractors should not bid at or below cost “just to get work,” according to Zack. “I understand that’s tough some days, but that’s our advice…. But they need to plan the work thoroughly, identify key dependencies with the general contractor and other subs, and provide your plan to the general contractor in writing so that they at least are on notice as to what you plan to do and when you plan to do it and how. And, if possible, get actively involved in the preparation of the baseline schedule and stay involved in the schedule-updating process, including attending update meetings. Don’t blow it off because, if you do, you may find that decisions are made that affect you as a sub by folks [who] are not subcontractors, and that kind of comes back to bite you.
“You need to review all schedules for errors … and notify the GC if you find any, in writing. Do not proceed with changed work until time and cost are agreed to and the change order is issued in writing, which is generally required by most prime contracts. Don’t allow changes to hang around and be resolved at the end of the job. Recall at the end of a successful job, the owner has his money and he has his project; why does he want to negotiate with you? Finally, you need to track all extra time and costs separately and contemporaneously; manage your changed work as a separate project.”
Zack additionally advised that contract requirements be “strictly” followed. “Give timely written notice [when and as required]. Don’t sign waivers or releases without a full understanding of what you're signing. Subs who run their projects this way are more likely to contribute to [the] general contractor’s success. And it’s been my experience that when the general contractor [is] profitable at the end of a job, it’s very likely that the subcontractor will be profitable also.”
In conclusion, Zack stressed that subcontractors “face a lot of challenges in today’s market. There are a lot of practical and legal problems associated with being a sub that, frankly, are not common to general contractors, but you’re still held to the common-law standard of entitlement, causation, and damages.”
Also during the webinar, called “Proving and Pricing Subcontractor Delay Claims,” Zack and Peters discussed typical subcontractor delays and impacts, contractual issues concerning subcontractor delay claims, practical problems involving subcontractor delay claims, problems associated with getting subcontractor delay claims passed through to owners, pricing considerations, and other issues.
A recording of the webinar with slides can be purchased via the following link: http://constructionpronet.com/Products/1010.aspx.