Contractor Quality
By Stephen Varone, AIA and Peter Varsalona, PE
I’m the property manager for several cooperatives in the Bronx and Manhattan, and the boards I work with always seem to have problems with the quality of the work performed on their capital improvement projects. There are leaks after a roofing replacement, newly installed windows that are drafty, and uneven heat distribution following a heating plant upgrade, to name just a few. The boards and I always check references and don’t always choose the lowest bidder on the projects, yet we still seem to get stuck with contractors that do substandard work, don’t return phone calls, and leave projects before they’re fully completed. How do we find contractors that can do a quality job—are they that few and far between?
Given the surge of repairs, upgrades, and new construction jobs in the New York City area during the past several years, finding contractors that consistently perform high-quality workmanship certainly can seem trying. Even firms with solid reputations and glowing references are only as good as the job that they do on your project. Moreover, finding a quality contractor isn’t enough—the firm has to be available to take on your project when you need them to.
One thing to keep in mind is that the quality of a contractor’s work depends on the specific project manager, foreman, and crew assigned to the project. Contractors typically employ several teams of workers, and the successful project cited as a reference probably had the firm’s A-team on it, while you could be stuck with their third stringers. Similarly, a good crew will perform less than their best with a mediocre foreman or with a project supervisor who’s stretched thin over many projects and can’t effectively focus on any one of them.
The engineer’s or architect’s specifications for the project should state that the contractor must assign an experienced, full-time project superintendent (sometimes called a project supervisor) responsible for the work. Ideally, the project superintendent (or on smaller jobs, a working foreman) should be on site full time, speak fluently in English (as well as in the workers’ language if other than English), and have a complete set of specifications, including change orders, project drawings, and manufacturers’ instructions. He should also maintain a daily log recording the number of workers at the site and the specific portions and locations of the work completed. The project superintendent should call the engineer or architect daily throughout the construction period to report on the day’s activities and the work planned for the following day.
Subcontractor Subterfuge
Sometimes the outcome of a project—good, bad, or mediocre—isn’t a true reflection of a contractor’s performance because they aren’t the ones who did the work. Some contractors frequently take on more jobs than they can handle and therefore must rely on subcontractors. Often subcontractors are put on the job without the property manager’s or board’s knowledge, employing such ruses as wearing shirts with the contractor’s name on them or driving the contractor’s truck.
A good contractor must still have the expertise to do your type of project.
A subcontractor’s work isn’t always inferior, but the contractor should be upfront by telling you who will be on the job that you hired them to do and getting your approval before subbing out any portions. The board has the right to reject any subcontractor—or project superintendent or crew member, for that matter—if they have doubts or concerns about his ability to handle the project.
Remember that a good contractor is still not the right contractor if they don’t have the expertise to do your type of job. A firm that has done lots of waterproofing work, for example, is not necessarily qualified for a historic restoration project if it doesn’t have much experience in that area. Make sure that the firm can point to successfully completed projects similar to yours, especially if the job requires specialized knowledge or skills or there are unusual circumstances involved.
Contractor references, of course, are self-selected, so you have to dig deeper to find out more about the projects: What were the scopes of work? How recently were they completed? Who were the project superintendents and crews? Were the projects completed on time and budget? How many change orders were there? What problems arose during the projects, and how were they handled? Look for signs that could raise red flags on your project.
The ideal time to ask these questions, of course, is before making your final bid selection, not after, as a hopeful confirmation. Regarding the bidding process, conventional wisdom calls for throwing out the highest and lowest quotes, but that knee-jerk decision can hastily eliminate good firms on both ends of the spectrum. A contractor may submit the lowest bid because they have a lot of experience with that type of work and can perform it cost effectively, while the highest bidder may foresee potential difficulties in the project that the other firms don’t. In any case, you and the board need to do your homework on the contractors before you choose one. (You can confirm that a contractor is licensed and insured, and if any disciplinary actions have been taken against them. See “Checking up on Contractors” sidebar.)
The bid selection should not be made without first interviewing the finalists. You will want to meet the project superintendents and ask them about their own experience with projects like yours and find out how long and on how many jobs they’ve worked with the crews that would be assigned to your project. Find out if they are currently supervising other jobs. A project superintendent with a full plate will probably not be able to devote much time and attention to your job.
Contract for Contractors
Even after doing due diligence in selecting a contractor, the property manager and board still need to stay involved during the project to keep the contractor on his toes. One of the best ways of doing so is to have a proper contract in place. The AIA Standard Agreement between Owners and Contractors (A101 and A201) spells out the key terms and conditions essential to any project, such as guarantees, insurance, payment schedule, change orders, supervision and safety, etc. Having the essential elements of the project clearly stated in writing helps avoid a lot of the unnecessary “we said/you said” misunderstandings and disputes common in a verbal or poorly defined agreement.
The AIA Standard Agreement between Owners and Contractors spells out key terms and conditions.
While the contract states what the contractor should do, making sure he does it is another story. The project engineer or architect should help you establish a set of requirements and milestones that the contractor must meet throughout the project to keep things on track. Timelines, product submissions, site meetings, and status reports serve as job checkpoints and keep the contractor accountable for the quality of work. Product manufacturers can help in this regard by making sure the work is performed to specification so that any warranties (as in a No Dollar Limit roof warranty) are not voided. The board should also ask to see samples and mock-ups of materials such as bricks, paint color, trim, and the like before the contractor orders them.
To keep the contractor focused on your project as it winds down, a retainage provision should be included in the contract. It’s recommended that at least 10% of the contract amount be withheld until 30 days after the engineer or architect signs off the project. After the project is deemed substantially completed, the board should work closely with the contractor and engineer or architect in drawing up a punch-list, walking around the property with them pointing out unfinished items. As residents, board members see things that contractors, engineers, architects, and even property managers don’t. Only after all the punch-list items are addressed should the project be signed off.
Liquidating the Damages
Another effective way to keep the contractor’s attention on your project is to have a liquidated damages provision in place. Liquidated damages are payments that the contractor makes to the building owner for failing to complete the project on time. For example, on a $300,000 project you might see liquidated damages equal to 1% of the total cost of construction ($300) for each day the project goes past the stipulated deadline in the contract.
Not surprisingly, most contractors balk at including liquidated damages in the contract. One way to get them to agree to the provision is to give them some leeway on when the liquidated damages kick in. On a 12-week project, for example, you could agree that liquidated damages won’t start until after 16 weeks. This gives the contractor some breathing room and still protects the board if the project runs into lengthy delays.
Another way to make liquidated damages part of the contract is to throw in a clause that gives the contractor a bonus for finishing the project early—with the same cushion for the board on the other end. So on a 12-week $300,000 project, the contractor would receive $300 extra for each day the project was completed before 8 weeks. The bonus is the flip side of liquidated damages, but it’s much more likely that a project will drag on beyond the deadline than finish early. Offering the bonus in order to obtain the liquidated damages agreement will protect the board and give the contractor a vested interest in getting the project done on time.
Although good work is indeed sometimes hard to find, thoroughly vetting contractors and holding their feet to the fire during the construction work will go a long way toward making sure your projects get done in a high-quality manner.
Stephen Varone, AIA is president and Peter Varsalona, PE is principal of RAND Engineering & Architecture, DPC. This column was originally published in the September 2007 issue of Habitat Magazine.