Know These Legal Obligations: The law’s effect on estimating

Shutterstock / Siberian Art
Shutterstock / Siberian Art
Published On
Sep 15, 2021

In the past, I have written briefly about legal obligations for electrical estimators. Most of my comments have been in reference to the language found in electrical specifications. In this article, I cover several sources of legal language that impact estimates. It is important to note that construction laws may differ by state. It is your responsibility to know the laws for the area where you are working.

Plans and specifications

Specifications have contained dangerous language since before I started estimating in the early 1980s. In the very first specification I read, I found this phrase: “It is the intent of these documents to provide for a complete and operational facility. Any omissions will be corrected by the contractor at no additional cost to the owner.”

Wow. The engineers required us to correct their mistakes for free. Fortunately, the courts in California and many other states found that engineers have “superior knowledge.” If they can’t get the requirements in the bid documents, we don’t have to include them in our proposals. Unfortunately, engineers keep coming up with new language calling for electrical contractors to take responsibility for design errors and omissions. The scariest phrase I have seen requires us to study the plans and specifications of all trades for electrical work and include any work found in our proposal. This—and all phrases like it—must be specifically excluded.

Another trend is when engineers “hide” work in the specifications or notes on the plans. I have known estimators that missed substantial amounts of work because they did not carefully read specifications and notes. In one instance, an estimator missed $30,000 of material by not reading a 10-word sentence.

Bidding instructions

In many instances, for private and public sector projects, the bidding instructions that come with the bid documents will become part of the contract if you are the low bidder. This means electrical estimators must locate and read everything that affects subcontractors, including items such as bid forms, schedules, construction phasing and bonding requirements. If you furnish a bid that is inconsistent with the bid instructions, it could be thrown out. Another important part of the bid instructions are the rules for withdrawing a bid.

Contracts

Contracts are not always available before the bid date. If they are, I always check the change order requirements. Many times, I’ve seen language that required contractors to lose money on change orders. For example, the contract for a Walmart store limited change order costs to time (at a very low rate), material at invoice cost and a single markup of 5%. The bid documents required the contract be signed with no revisions. Obviously, my customer passed on that project.

Before signing a contract, it is very important to have it reviewed by a lawyer specializing in construction law. Even innocent-sounding language can severely affect your company if things go wrong. One of my first employers had an employee get injured when his scissor lift rolled into an open trench. The general contractor that had primary responsibility for safety on the project was relieved from the lawsuit because they were “held harmless” unless they had sole responsibility for the accident. It turned out there is no such thing as sole responsibility. In this case, the plumber who left the trench open and the electrician who fell into the trench shared responsibility.

I dealt with a lawyer who prepared two lists when he reviewed a contract. The first list was items that could be negotiated. The second list was items that must be eliminated or revised before signing the contract. This approach worked very well for the preparation we needed before a contract negotiation.

Proposal language

Your proposal is particularly important when it comes to protection against dangerous language in documents you are legally tied to when bidding. I recommend using language that limits the work to only what is clearly shown on the documents you are including in your bid. Incorporate a list of those documents in your proposal, including all specifications, plans and addendums. For instance, write “This proposal is based on the following documents: E100, specification 16000 and addendum 1.” Then follow with your exclusions and qualifications. Finally, state that you are only including what is clearly shown and described in the above referenced documents.

I have only touched on some of the more common effects the law has on estimating. I always recommend that estimators get additional training in construction and claims law as soon as they can.

About the Author

Stephen Carr

Estimating Columnist

Stephen Carr has been in the electrical construction business since 1971. He started Carr Consulting Services—which provides electrical estimating and educational services—in 1994. Contact him at 805.523.1575 or steve@electrical-estimating.com, and...

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