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Specifications: getting the job done right.

Every year building owners, homeowners' associations, and property managers hand over millions of dollars to contractors for work which is specified by the contractor and inspected by the contractor. This is a sure way to fiscal disaster.

When it becomes time to re-paint, re-roof, re-coat the decks, re-seal the asphalt, re-plaster the pool, or perform some other construction maintenance, most building owners and property managers call up the local contractors, briefly describe the work to be performed, and ask the contractors to evaluate the situation and submit a bid.

If all the contractors contacted have the same skills, use the same construction products, and intend to provide the same exact work, the bids received may be somewhat valid. However, contractors do not perform the same quality of workmanship; they do not use the same materials; and rarely do two contractors understand the scope of the work identically.

The only method of assuring that work is bid and performed correctly is to prepare a detailed contract documents package, and then oversee the work. This can be achieved by retaining a specifications consulting firm or by training management personnel in specifications requirements for less complex tasks. It may be possible to create standardized bid packages for repetitive projects.

A Certified Construction Specifier (a designation given by the Construction Specifications Institute) usually prepares the specifications and written contraction documents on new construction for architects, engineers, and developers. But the skills and knowledge construction specifiers have may be invaluable in preparing the same type of contract documents for your remedial work.

Evaluating what is really wrong Just because you think you have a problem does not mean that you do have that problem. It is also possible that the problem you have is only symptomatic of another, related problem.

For example, your asphalt paving is cracking in spots, your seal coat and striping is pale, and the paving is rough in some areas. Your first inclination is to call the asphalt contractors to re-seal the paving and stripe it.

It may be that the base beneath the asphalt has changed over the years or that new developments in the area have changed the subterranean flow of water beneath your pavements. Possibly, tree roots are interrupting the performance of the substrate base. Excessive landscape watering may be eroding your seal coat and asphalt surfacing. Maybe the last contractor who sealed the asphalt used inferior materials.

If the time for re-painting is approaching, is the peeling, cracking, blistering, fading, and corrosion a sign that a certain length of time has elapsed since you last painted, or is it possible that other factors are affecting the degradation of your paint? These factors could include water or moisture intrusion into the substrate materials causing blisters.

The wood trim or siding may have cracks because of building movement which the paint cannot accommodate. Maybe the paint last used was a "production-quality" paint typically formulated for mass application in new developments. Possibly the last painter did not prepare the surfaces properly and the resulting paint failure will be covered under his or her guarantee, Reformulations of paint products mandated by governmental authorities can also affect life expectancy. The potential is there for any building owner, association, or property manager to be misinformed and convinced into paying for work which may be misguided, unnecessary, or incomplete. A technically objective opinion from a specifications consultant or a manager knowledgeable in construction, evaluating the actual needs and offering solutions with any available cost-saving alternatives, is vital before work is bid.

The bid package

After the project is evaluated and an anticipated budget is approved by the owner, the contract documents package may be prepared for bidding. This package should consist of several key documents, including instructions to the bidders, bid forms and proposal, the contract agreement between owner and contractor, performance bonds (where necessary), general conditions, special conditions (where necessary), project description or general requirements, and finally the technical specifications.

* Instructions to bidders. As the title of the document implies, this section identifies that an entity is accepting bids for certain specified work. It states who will be accepting the bids, its address, and the latest time and date for accepting the bid. Included is a requirement that the bids be submitted on the prepared bid forms and marked a certain way in a sealed envelope. This document also states who prepared the bid package and how to contact him or her with any questions. Further, the document should outline how a bidder may withdraw a bid, how the bids will be opened (either publicly or privately), and whether the owner reserves the right to reject any or all of the bids on certain technicalities. In this document, it is important to state whether the bidders will be required to provide bonds and which ones, and what type and amount of insurance will be required. If permits are required by building codes, the fact should be stated here. If there is to be a meeting with the owner or a representative prior to the start of work, it should be disclosed in this document.

* Bid, or proposal, form. This document is prepared so that each bidder submits a document which can be compared to another bidder's submittal. It will yield a uniform arrangement of information. Providing this form to the bidders facilitates fair and equitable comparison for awarding a contract. The benefit of preparing and providing this form to each bidder, rather than accepting each bidder's particular form, is that there is no fine print, no surprises, no exclusions, and no inconsistencies. This form is used not only to obtain a lump-sum bid or stipulated-sum bid, but it can require the bidding contractor to furnish unit prices and alternate prices. A key element of this form should be a requirement for the bidder to specify the number of work days required to complete the proposed work. This becomes important if one bidder provides a low bid, but proposes to take twice as long to complete the work. Include on this form a blank for the bidder to provide the company's or individual's license number, signature, address, telephone number, and date. The address here should be an address at which legal documents can be served;' should it become necessary. A post office box, answering service, or letter drop address could prove to be a problem later. On work which will exceed 100,000, certain information should be required of bidders just as a precaution. The type of firm (sole proprietor, partnership, or Corporation), names of all principals of the firm, number of years as a contractor in work of this type, and three or four projects of similar size and nature as a reference should be included. If this bidder will be subcontracting a portion of the work out (usually over 5 percent of the total contract) to other firms, it will be necessary for the bidder to identify the subcontractors in detail.

* Agreement. This is the a tract to perform the work, which is entered into by the owner and the contractor. This document can be lengthy or brief, depending on the complexity and value of the work being performed. Another determining factor is the relationship (old or new) between the owner and the contractor.

It is essential that the contract make specific reference to the work location and the owner's name, and then list the documents in the bid package which are made a part of the contract by reference. Require the contractor to work diligently and complete the work within the specified number of days proposed. Make the contractor responsible for the work and the existing buildings.

One such paragraph which can be included is: Said contractor agrees to receive and accept the following prices as full compensation for furnishing all materials and for doing all work contemplated and embraced in this agreement; also for all loss or damage arising out of the nature of work aforesaid, or from the action of the elements, or from any unforeseen difficulties or obstructions which may arise or be encountered in the execution of the work until its acceptance by the owner, and for all risks of every description connected with this work, also for all expense incurred by or in consequence of the suspension or discontinuance of work and for well and faithfully completing the work; and the requirements of the owner under them. Insert the contract lump sum or whatever verbiage is appropriate, and add any terms of payment.

Bonds. Several types of bonds are available. The most widely used are the performance bond and the labor and material bond. The performance bond is posted by the bidder to whom the contract is awarded as a guarantee that the work will be completed. Performance bonds most often are required to be in an amount equal to 100 percent of the total contract sum. While practices of bonding companies vary, premiums for 100 percent are generally no greater than for bonding in smaller percentages. Actual premiums vary according to the performance record of the contractor; currently 1 or 2 percent of the total bond amount is the average cost. The labor and materials bond is posted by the bidder to whom the contract is awarded as guarantee that all the materials and labor used will be paid for and that the owner will not be left liable for liens against the completed work. This bond is also generally in an amount of 100 percent of the contract amount, and a current average cost is 1 to 1.5 percent of the total bond amount.

* General conditions. This document prescribes the administration of the work. Subparagraphs for inclusion should be: site visit; codes, permits, and fees; owner's representative; project supervision and coordination; progress schedule; progress payments; accounting records; changes in the work; clean-up and removals; guarantees and warranties; contractor's insurance; and equal opportunity provisions. It is good practice to require any bidder to visit the location where the work is to take place. This may help ensure that the contractor does not come back later asking for more time and money to perform the work because of some constraint posed by the limitations of the site. Under the codes paragraphs, require the contractor to follow all applicable codes, pay for permits, and include the cost for taxes and miscellaneous fees in the bid quotation. Disclose that there will be an owner's representative on the site to oversee the work, ensure compliance with the contract documents, and act on behalf of the owner should any questions arise during the course of the work.

The paragraph on project supervision should require that the contractor be responsible for coordinating the work, including that of subcontractors. It also requires that there be full-time, on-site supervision by an experienced superintendent until work is completed. This is a must. Require a progress schedule be submitted before execution of a contract agreement. It is advisable to ensure that work is performed constantly and continuously. Specify how to apply for progress payments and what provisions are made for hold back or retention percentages.

Require submittal by the contractor of pertinent bills of lading and material payment slips. This is required so that reasonable assurance can be made that payments for materials have gone to suppliers for materials used on this project, not some other project this contractor is working on.

Changes in the work will probably have a cost and time impact. This paragraph should specify what is acceptable and agreeable in the way of overhead and profit margins. Customary practice would be 10 percent overhead, 10 percent profit. On changes under $2,000, 15 percent is reasonable.

Notify the contractor that daily or weekly clean-up of accumulated debris is required. Indicate the location or locations of debris bins. State who is responsible for the removal from the site, and at whose expense.

Dictate to the contractor what specific guarantees and warranties are expected. Do not allow the contractor to specify the duration of responsibility to replace or correct defective materials or workmanship. Of course, normal trade practice and local custom may suggest what is suitable. This paragraph on guarantees and warranties just requires certain minimums. Wording such as the following could be used: Guarantee all work, materials, and products for at least one year after date of acceptance of work, unless a longer duration is specified within individual technical specifications sections, or a longer trade or material warranty is customary and standard. Repair or replace, or cause to be repaired or replaced, all such defective work, together with other work which may be displaced in doing so, without additional cost to owner. Ordinary wear and tear, abuse, or neglect excepted.

If it is customary for paint manufacturers to warranty their products for five years, it would be unreasonable for a painter to guarantee his or her workmanship and materials for only one year. Roofing materials are normally warranted by their manufacturer for 10, 15, or 20 years, but most roofers offer only a limited two-to-five-year guarantee on workmanship. A proper specification will delineate what is required for each specific guarantee.

Insurance matters can be discussed with the insurance carrier on the property, but it is advisable to require that the contractor maintain contractor's comprehensive general liability insurance and contractor's property damage liability insurance. Each of these should specify a limit of $500,000 to $1 million depending on the nature of the work being performed. If the contractor has subcontractors working on the project, they should also maintain certain levels of insurance. Of course, the contractor should also carry workers' compensation.

* Special conditions. This document is not always necessary. It can specify how to maintain owner access to property during work. Some contractors like to have unlimited freedom to use the site as they wish. Appropriate verbiage to prevent this could be as follows:

Nothing in these documents shall be construed as allowing any prohibition of legitimate owner or emergency vehicle access to any part of the existing structures or site at any time. The first prerequisite of this contractor during the execution of this contract shall be to protect owner access to the site and its various parts at any time. Where conflict between the work of this contract and the right of access occurs, this contractor shall so notify the owner and shall do no work in areas in question until a clarification is issued by owner. Obstruction of legitimate and reasonable owner access by this contractor shall be considered grounds for termination of this contract by the owner.

* General requirements. There are numerous documents developed to further refine the requirements of the administration of the work for complex projects. Included would be requirements for parking, temporary signs, toilet facilities, inspections, submittal of sundry information documents, invoices, warranties, parts lists, and so forth. This information can go in a few or many different documents.

* Technical specifications. The technical specifications are the documents which spell out the exact products or materials to be incorporated into the work and how to install these products or materials. These are the documents which describe quality assurance items, samples required, trade or industry standards with which to comply, extra materials to be left for maintenance after completion, and so forth.

What materials or products are involved will determine the exact content of the technical specifications, but the technical specifications are the documents which most contractors will focus on. The specifications are the documents which the owner's inspector will rely on most to enforce the performance of the work.

Under no circumstances should specifications prepared by a material supplier be used as the basis for the work performed. These documents, often issued at no cost by paint companies, roofing suppliers, and so forth, are heavily biased toward the supplier and the contractor.


In the absence or presence of a comprehensive contract documents package, only periodic or full-time inspection will ensure performance of the work as it should be. All building owners need someone acting on their behalf, looking over the shoulder of the contractor to enforce strict compliance of the terms, conditions, and technical requirements of the contract documents.

With the contract documents and inspections, there is a reasonable assurance that the work will last as intended, that warranties can be enforced, and that monies spent will yield something of value over a specified period of time. Armed with documents and inspections, any owner, association, or manager can take solace in the knowledge that the work was performed as best it could be for the monies paid and that all parties to the contract received fair and equitable treatment.
COPYRIGHT 1990 National Association of Realtors
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1990 Gale, Cengage Learning. All rights reserved.

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Author:Peterson, Gary N.
Publication:Journal of Property Management
Date:Sep 1, 1990
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