Construction contracting - Building Principles

Camping Magazine, May, 2002 by Michael W. Weeks

As a facility owner and operator, you are faced with the task of contracting with professionals and contractors on a regular basis to accomplish many of your maintenance and development needs. The importance of a contract, which is a legal agreement, is often overlooked because:

* we have worked with him forever,

* he has worked here before and we had no problems, or

* it's just a small job, what could go wrong?

These are often the mindsets that set the stage for a very sour relationship with a contractor. How many times are you as the operator under the gun to complete a facility project where your primary concern is having it done before camp opens? The last thing on your mind may be the legal agreement between you and your contractor. This agreement is often analogous to a marriage, and everyone knows that for a marriage to be successful there must be an understanding and communication of the rules between both parties. Incorrect assumptions by any of the parties with no written backup spelling out the conditions, time frames, and project specifications are inherent in a verbal agreement and are destined for conflict. What steps, as an owner, operator, or director of a camp, should you take to insure that your expectations of your contractor, and more importantly your project, are properly conveyed and realized?

Read the Fine Print

Any time you plan to hire a contractor for services, whether it's an engineer for the design of a new sewage disposal system to accommodate the new bunkhouse or a roofing contractor to replace the leaky roof on the dining hall, you must enter into an agreement formalizing the scope of work, cost for services, and time frame for completion. Many times your design professional or contractor will have a standard contract for your execution prior to their initiation of work. Most often, these agreements are written to benefit the contractor, not the owner. Failing to read the proverbial fine print may result in discovering that waste removal was not included in the agreement.

Be proactive

You have the ability to be in the driver's seat by taking a proactive role in constructing contracting. The success of your "marriage" to your contractor is highly dependant upon the mutual understanding of the project scope. For example: Does the roofing project include the replacement of underlayment sheathing, is there an allowance for it, or will it be a change order at the end of the job because the contractor specifically excluded it from his contract? A camp executive's primary business is operating a camp and ensuring that it opens on time and runs safely, not construction or contract administration. The other parties with whom you are contracting are thoroughly familiar with the contract itself as well as the contract loopholes and the effect of those contract loopholes on the project. You must bear this in mind when you execute a contract not prepared by you or your agency. Now that we understand why we need a formal agreement, let's discuss what types of conditions and topics should be included in your agreement and how they will protect you if something goes wrong.

Standards for Contracts

There are several published standards for contracts between owners and engineers and owners and contractors and standard agreements for the actual construction of the improvement. These are published by organizations such as The American Institute of Architects (AIA), the National Society of Professional Engineers (NSPE), and the Associated General Contractors of America (AGC) and are available for a relatively small cost. Although each document bears the slant of the organization that prepared it, they are time tested and offer a reasonable starting point for owner-contractor agreements.

A typical contract document for a construction project consists of several different sections. Generally it contains:

* legal agreement

* bonds and insurance

* general conditions

* special provisions

* project specifications

* contract plans

The agreement, bonds and insurance, and general conditions are what we refer in the industry as the "boiler plate," since these sections are typically not modified from project to project. Your facility should have a standard "boiler plate" that it utilizes for each and every construction contract. The special provisions, specifications, and plans are the project specific portions of your project and are tailored to meet the demands of the scope of work and your facility. The project specific portions are as indicated project specific and can be prepared to varying degrees of detail depending on the project.

Legal agreement

The legal agreement is a standard agreement between the owner and contractor binding them to the terms and conditions of the construction contract in it's entirety Apart from the general conditions, specifications, etc., the agreement would serve no purpose, as it contains no specifics as to project scope, time frame, etc.

Bonds and insurance

Bonds and insurance must be provided by the contractor prior to execution of the contract, and copies should be physically integrated into the contract. The general conditions provide for the terms of insurance and bonding. These details must be considered specifically for your facility and for each project, with advice from your legal and design professionals. You need to determine what level of protection you are seeking from the bonds and stipulate the amounts and type required for your projects. Bear in mind that the more extensive the insurance requirements on a project, the higher the bid is likely to be.