Previously, SCCA has provided members with information and seminars on contract administration during the bidding process, contract formation and performance of work on a project. At a time when the paperwork requirements of contractors particularly with the State of California and local governmental agencies has increased exponentially, it’s easy for a contractor to neglect documenting and communicating bidding, contract and performance issues on a project as they arise. Which can come back to bite contractors during the claims process.
Following is a quick refresher course on three aspects of contract administration.
Bidding process
With the evolution of “best value” bids and prequalification packages, a pure competitive bidding process no longer exists on many public jobs, inconsistent with the spirit and purposes of the competitive bidding statutes in the Public Contract Code. Therefore, a thorough review of the bid package, including bid plans and specifications, and the individual line items set forth in the bid package is increasingly important.
On private jobs, plans and specifications are typically provided from which contractors and subcontractors provide proposals. It goes without saying that these documents must be thoroughly reviewed by the estimating team.
If any ambiguities appear in the scope of work covered by a line item, and/or if there are inconsistencies in any part of the bid package, including the plans, particularly between the notes and the actual drawings, and in any unit pricing, immediately send a Request for Information or Request for Clarification to the bidding entity.
Also, it’s common that Addenda to the bid package are issued shortly before the bid date and time. Addenda typically become a contract document and must be taken into account in the final bid submitted.
Contract formation
While this may sound odd, read contracts.
On public jobs, you’ll already be familiar with the contract documents through the bidding process. Regardless, the contracts submitted upon award of the project should be reviewed thoroughly. If any questions exist, particularly between provisions relied upon prior to bid and changes in the final contract package after bid, a discussion needs to take place immediately with the agency and then confirmed in writing.
On private jobs, particularly if it is a maiden voyage between the contractor and a private owner, the proposed contract needs to be thoroughly analyzed. Unlike many public contracts, private contracts are more prone to negotiation. If you have legal counsel at your disposal, utilize this resource to assure the contract provisions are acceptable and you are not waiving rights that otherwise would and should be preserved.
If you are a subcontractor, review not only the subcontract agreement but also the terms of the prime contract between the owner and the general contractor. Why? Many subcontracts include an incorporation clause, wherein the terms of the prime contract are incorporated into the subcontract agreement and the subcontractor agrees to be bound by the terms of the prime contract. Yet, many subcontractors skip this step, usually due to time constraints. If you are agreeing to be bound by the terms of the prime contract, read and analyze it before executing a subcontract agreement.
Performance of work
Two words are extremely important here: notice and documentation.
As governmental regulation has increased, contractors are under increasing pressure to prepare and submit paperwork. This should not be done at the expense of contract administration when the actual physical work is being performed.
If you encounter differing site conditions and utilities that are not marked accurately on the construction plans by elevation and profile, immediately place the owner entity on written notice of the condition. If a Notice of Potential Claim or similar form has been provided with the contract document package, use the form, even if the amount of the claim cannot be quantified yet. The form can always be supplemented with the actual amount of the claim when it is calculated.
If delays are encountered, document the delays in written communications with the owner. Typically, owners wait until the 11th hour to raise the issue of liquidated damages. Sometimes, particularly on public projects, the owner will not issue Weekly Statements of Working Days wherein delays are noted each week during the performance of work and in response to which the contractor can lodge an objection. Be proactive. Place the owner on notice of delays caused by entities other than your company.
Conclusion
SCCA’s Construction University Committee has a rapidly growing library of video seminars on a variety of subjects pertinent to members, including a detailed presentation on contract administration. The videos can be accessed through the SCCA website.
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