Good Questions

Shutterstock/ Mr. Whiskey
Shutterstock/ Mr. Whiskey

It seems that every time an electrical contractor signs a construction agreement, it has the same hopes: the job will run smoothly, the bid was good, payments will be made on time and the other contracting party can be trusted. Beyond this wish list, how much further do you go in trying to assess and plan for the risks you are taking?

Some ECs have an informal prebid meeting about these subjects, with the depth of discussion limited by how much participants think about the open question of risk assessment.

Other electrical contractors I have represented take a more formalized approach, using a written checklist for the meeting agenda. A number of issues tend to appear on a majority of these lists. This article outlines many of these topics.

Who are you contracting with?

Always consider who the other contracting party is. If it is an owner, is the owner experienced in construction or is it one who only occasionally enters the market, such as a church or a hospital? Does the owner or contractor of the other party have a known track record for performance or for litigation? What do you know about how the job is being financed? Will there be any governmental agency involvement, either for financing or approvals of work? Will there be third-party financing? Who owns the property? Is there a limitation on a mechanic’s liens?

Project location

Almost equal in importance to knowing about the players is what the playing field looks like. Have you investigated site access, work area access, availability of local labor and proximity to suppliers? Have you done a site inspection to learn about soil conditions, site drainage, existing structures and local weather conditions? Are there other projects in the area that may affect your ability to get labor? Are you licensed to work there?

The owner’s rules

There are projects, e,g., pharmaceutical installations, where the owner prohibits smoking and eating at the building or even in the surrounding areas. Some power plants have a limited number of gates to enter the project site. Does the owner have its own security or health and safety regulations? Are there limitations on work hours or days when work is not permitted? For federal government contracts, the applicable regulations would require analysis beyond the scope of this article.

Experience with the type of work

Is the dollar value of the contract you are bidding high in relation to your typical jobs? Do you have experience with this type of construction, for example, schools, hospitals, jails or other jobs that would involve some unique installations? Are there paperwork (reporting or scheduling) requirements beyond what you are used to? Do you have the equipment for this type of work?

Quality of design documents

Do the drawings appear to be complete? Is your scope of work adequately defined? Do you have a full set of drawings and specifications or just those applicable to your work? Do you need to see the structural drawings, for example? Has your estimator made assumptions based on lack of clarity on parts of the design documents? Is there anything in your contract scope to indicate you have any design/build obligations or responsibilities to review the owner’s design documents for accuracy? Do you have clarification questions that must be answered before you bid?

Review of the terms and conditions

Not all bid documents include the form of contract/subcontract that will be used for your work, and often the general contractor’s contract with the owner is not included with the bid documents. However, that contract will be incorporated by reference into your subcontract so you should obtain these documents and do more than a cursory review of them.

Note also that, at times, terms and conditions of a contract are buried within the specifications. Do the terms and conditions contain clauses such as pay-if-paid, no damages for delay or indemnity obligations? Does the contract include a reasonable schedule for completion? Is there a detailed planned schedule for the work? What are your obligations for preparing a schedule (CPM or bar chart)? Is there a “disputes” clause specifying arbitration or choice of law (what state’s law applies) or a specified place in the event of a lawsuit or arbitration (venue)? Are there unusual record-keeping requirements? Are there requirements for a full-time job supervisor, health and safety officer or another specialized employee? Do you have exclusions and exceptions that you want to incorporate into your bid? Are you including confirmation of all agreements you have reached orally or in writing with the other contracting party, such as storage areas, laydown areas, location for field trailers, use of others’ manlifts/elevators and work area access?

Give thought to the questions I have raised to make your own checklist of the risks that you should evaluate before submitting a bid. This is also an appropriate time to consult with your construction lawyer.

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