Parties to the construction process--owners, architects/engineers (A/E's), prime contractors and of course subcontractors--are becoming increasingly aware of contract risks and the allocation of those risks to the various parties. Measures a subcontractor should employ to minimize his financial exposure are outlined in this three-part article. Part I discusses the bid phase. Parts II and III discuss the preconstruction phase and the construction phase, respectively.
Most contracts require prospective bidders to visit the site. A site investigation report should be written. It should include the investigator's general impressions regarding accessibility, local weather conditions, availability of utilities, and recognized problems. If photographs are taken, they should be included. The complete report should be made available to all members of the estimating team.
Because many owners and contractors retain attorneys to prepare the General Conditions portion of their contracts, the subcontractor should make a review specifically to point out any unusual or restrictive language, to assess his interpretation regarding the intent and impact of this language, and to outline ways of coping with problems which may result from the language.
The project's original estimate should be maintained in the corporate or divisional headquarters. This is a primary document which indicates intent of the subcontractor, and describes the conditions and work which he has contemplated and tendered a price on.