Milton Fineline has been chief estimator for Altair Electric (a fictional entity) for over 17 years. He has earned a reputation for detailed accuracy, meticulousness and good judgment, although he has had little experience with electrical installation.
One aspect of Milton’s estimates, which sets him apart from many other estimators, is adding lists as attachments to his estimates. List 1 contains all elements of the job not in his estimate. List 2 itemizes parts of the drawings and specifications that he thinks require assumptions on his part, sometimes even including a statement that installation of prior work needs to be completed by others before Altair could begin. Milton’s bid clarifications were then incorporated into the contract.
While other electrical contractors might be more cautious about submitting such listings, general contractors and owners appreciated Milton’s clarifications. Then came the casino project.
The developer of the hotel/casino had put the project on hold for nearly two years. The project’s suspension was ordered before the design was completed. Now that the developer thought the time was ripe to proceed, it met with the potential bidders, some of whom brought their favorite subcontractors to the prebid meeting. At that meeting, the developer explained that the design was at an 80% complete stage, but that a fixed-price contract would be awarded.
This clause was in the proposed contract’s general conditions and was to be incorporated by reference into every subcontract: “Contractor acknowledges and agrees that the project design is complete in concept and that the detailed design is 80% complete. No change orders shall be considered as the design progresses unless there is a change in concept or scope from that contained herein. Minor adjustments and details needed for a complete system shall be through Contractor’s field engineering at no cost to the Developer.”
Altair Electric and the general contractor had extensive experience with hotels and casinos, a factor that would play heavily into who the developer chose to get the award. This project appeared to be a very profitable one, so Milton got to work analyzing the electrical portion of the project.
The other 20%
When he reviewed the bidding materials, including the “scope changes” clause noted above, Milton became distressed. What was the 20% left to be designed? Was it whole systems, or just pieces here and there? Would he have to do a detailed analysis of the drawings to determine what was missing? In addition, the words “scope,” “original intent” and “minor changes” seemed vague. As for “field engineering,” everyone Milton talked to had a different definition.
The president of Altair, Johnny Clubman, was a friend of the general contractor’s CEO, and Johnny did not want to disappoint him by refusing to bid. Johnny was a risk-taker, but he also trusted his project team. He made his feelings known to Milton, saying “I’d really like to take this job.” But other project people from Altair did more than whisper in Milton’s ear that the job could be a disaster and should be avoided.
Instead of trying to force his detailed mindset to fit what seemed to be a loose, somewhat undefined design concept, Milton tried to make the undefined concept fit into his ordered mind. Here’s what he did.
As usual, Milton added lists to his estimate. Among the new items on the lists directed to this new project were the following:
Altair accepts no responsibility for electrical design.
Altair’s bid assumes that all systems are shown on the drawings and that the general layout will not change.
All of the design completion by Developer shall be made known in advance in order to support the original schedule.
Field engineering shall mean, and shall be limited to, minor field adjustments and routing decisions.
A written answer from the designer for a request for information shall be given within three days of the request.
Milton also thought there was an ambiguity in the scope clause. On the one hand, that clause in the general conditions provided that extra payments would not be made unless there was a change in scope, indicating a significant change. Yet field engineering to accommodate changes within the scope were only for minor adjustments. When does minor become major? He decided to keep this thought to himself for possible use if there was a dispute.
The best option
Milton figured there were three options available to Altair: 1) do not bid this job, 2) bid and keep their fingers crossed or 3) bid the job with Milton’s lists attached.
Which do you think is the best choice? Or, is there a better option?
About The Author
ITTIG, of Ittig & Ittig, P.C., in Washington, D.C., specializes in construction law. He can be contacted at 202.387.5508, [email protected] and www.ittig-ittig.com.