Cliffhanger?

We recently finally reached substantial completion on a project. The ride to get there has been exceptionally  bumpy.  I just filed a claim to get paid for the 10 large precast coping pieces on a bridge parapet that were rejected and had to be replaced.  The architect was unhappy because we had not aligned the coping joint with the expansion joint in the cast-in-place retaining wall below the precast. The GC was down to the wire in terms of substantial completion and large penalties. They directed me to replace now and argue later. I complied. In a reasonable business on a reasonable planet, this would unquestionably be considered a constructive change.

But we do not regularly work on such a planet, and so we will see what happens. This particular elevation has jazzy railing, but overall the wall did not seem architecturally significant. I would display the elevation from the contract drawings, but it was never shown in elevation. Some people will consider that an obvious clue that the wall was not architecturally significant.

In the photo below (taken before caulking and final cleaning, you see our precast coping atop a portion of a cast-in-place retaining wall).

Here is one of the 5 occurrences of the expansion joint.  The yellow X’s indicate replacement and the yellow vertical line on the coping shows the desired location of the coping joint.

Here’s the other side of the wall, where it was clear (both in normal architectural terms and from the contract drawings) that the coping joints aligned with the panel joints.

 

Last week I wrote my second letter pushing to get paid. I thought the letter was a fine letter as such things go. But that does not mean it will produce the desired result. These matters can get complicated.  If the GC makes a claim and gets paid, we’ll get paid. The most productive thing I can do is to pressure them to aggressively pursue the claim with the owner and provide them with readily packaged ammunition (such as emails they can simply forward with a cover sentence or three).

It’s all the other scenarios, where the owner declines to pay, that keep me in suspense. Time will tell.  Here’s the letter (an email, as even our ancient industry lives in the 21^st century) for those who are interested in such matters.

=============================================================

From: Leo Schlosberg [leo at caryconcrete.com]
Sent: Wednesday, April 25, 2012 10:27 PM
To:  _ _ _ _ _ _

Subject:  _ _ _ _ _ _   Claims & Extras – Coping revisions ordered at expansion joints.

As previously stated, we believe that replacing 10 pieces of coping so the coping joint would align with the retaining wall expansion joint was a constructive change.  You ordered us to make the change (apparently based on direction you received from _ _ _ _ _  _  and which you did not wish to question) without delay and to raise cost issues later.  We have laid out our case in previous emails. Here I re-iterate the basic points and quantify the dollars.

If I have missed something in the contract drawings, please accept my apologies in advance.  I see no basis in the drawings for the revised alignment of coping joints; in particular I do not see anything that could reasonably have led us to believe such an alignment was required. If it’s there, please point me to it.

Additionally, at the very least, two opportunities to communicate that alignment were missed. It might have been shown in an elevation, but there is no elevation in the drawings.  That fact, the apparent lack of architectural significance or concern for that elevation, means there is no way for us to divine intent.  Our shop drawings clearly showed the coping joints. No comments were made by the reviewer either time such drawings were submitted.

In the shop drawing process we raised a number of architectural issues related to the coping and other pieces. We did so because we have a feel for such matters and we know to defer to architects’ judgments on esthetic matters when we have even small doubt.  We did not do an RFI or otherwise call attention to joint alignment on that face of the coping because it never occurred to me or to the drafter that there was any particular architectural intent there.  _ _ _ _ _ _  was well aware of the much-discussed need for field measurement relating to coping (i.e., the horizontal face-of-precast to face-of-retaining wall dimension). But it never occurred to you, just as it never occurred to us, that we needed to align with the expansion joint.  And it was not noted on the earlier architect viewings of that wall. On first viewing there was much discussion about the size of the bed joint, but no mention of alignment with the expansion joint.

If no one told us before fabrication, how were we to know? And if we weren’t told and had no way to know, how can doing it twice be considered as part of our contract? If the architect is allowed to state a requirement for the very first time when viewing in-place work, then the contract documents are pointless as a means to define what is required.

The original bid documents had the coping as bid item 9 and we priced it out both as a discrete item and as part of the wall.  We priced the coping at $22,400. There are 22 pieces, or $1018/piece.  Replacement is more expensive than furnishing because one must not only do what you have to do to furnish, but you must also remove and dispose of the original pieces.

Therefore we propose $1150/piece, for a total of $11,500.

Please let me know if I need to take any further action to pursue this claim.

——

Leo Schlosberg   www.caryconcrete.com

Office: (815) 338-2301  Cell: (847) xxx-xxxx

Learning about window washing

Two salient aspects of this business are that you keep learning new things (both business-technical and construction-technical) and that the contracts, the whole business approach of the industry, is to push risk and trouble down to the subcontractors. Often what you end up learning is that this particular clump of leaves you stepped in is dog poop with a leaf or two on top. You learn to discern many shades and textures of brown stuff that can cause problems, some minor and some major. And of course, many apparent clumps of leaves are just clumps of leaves and it’s fine to step in them.

We have a good size job that consists of many GFRC (thin-shell material) column covers on both the interior and exterior of a school. We are selling these FOB jobsite to a large interior contractor. Today I received an email with a shop drawing from the company that makes equipment for window washers, such as devices that help a person safely go up and down the face of a building.
GFRC is thin and while it often has an integral stud frame, in this application there are internal ribs acting as stiffeners. There is no spot on the panel that can accept even a modest point load such as a tie-off lug for a safety harness. I was totally surprised by email. Of course it included a “how fast to engineer?” question (silent but implicit on the question of who pays for such engineering) and a “need answer for tomorrow meeting”, and so it was time to get schooled. Careful look at elevations indicated they were shown (but ignored, unrecognized by me and by the estimator) and someone found a relevant note buried on a “G” sheet (“G” for “general”). The technical outlines of what had to occur were clear: a bracket to transfer load the 12”+ back to the steel column plus a hole in the column cover for the penetration and some added complexity and coordination for the installer. In business terms it may mean we have to pay for engineering and maybe for bracket fabrication as well. Or maybe not.

As is my inclination, I dug deeper and wanted to be sure I understood things. Turned out that worst case was that we were on the hook for two of these, on the very tall (3-story) column covers at the entrance. Looking at the plan I realized that while these columns were in line with the face of the building, the first three floors stepped in at the entrance, sort of a huge canopy. I got excited – this hardware was likely not needed, we could dodge this dart. There was not glass within 11’ of the column, so why worry about window washers. I told my customer to raise this at his meeting and he probably would have to do nothing. Then my teacher/adviser, the general manager at the GFRC plant, who bitterly recalls encountering window washing equipment on walks in these woods where he stepped on what he thought we innocent leaves, explained that there was glass above, and that equipment and people might want to go to/from the ground and so they would need these, even if there was no glass right there. Now I know a tiny bit more about the possible interfaces between precast and window washing equipment.

On the business-technical side, I learned a tiny bit more about scope holes (items that are necessary to the completion of the project or structure, but neither the general contractor nor any subcontractor or supplier has included them in their bids). They always exist.on non-standardized structures (which includes most of commercial construction) and they are like little darts that everyone tries to dodge. The note on the G sheet got there because the salesperson for the specified equipment had a relationship with the architect. Placing it there helps them avoid being stuck with the costs, or even with arguing about it.

As my friend Lou Dolmon says, you want to learn something new every day. Today I learned a little bit about window washing and again learned to be careful about thinking anything is simple in this business.

Joint checks

In this business, there is steep competition for “least fun” aspect. Getting paid, seeing to all the paperwork until you have a negotiable check clearing the bank, is one of those unpleasant aspects for me. We don’t own a plant or have onsite labor — almost all the incoming dollars are committed to suppliers and subcontractors. We try hard to get them their money as soon as possible. It is not always easy.

This tale of mild woe (or enlightening educational experience if you prefer that slant) starts with getting a modest ($60,000) contract to furnish and install column covers at a large bus depot. The GC was behind and we tried getting paid for stored material. They and the owner were amenable, but as the project financing included federal stimulus money, their rules had to be followed. The architect or owner had to send someone to the plant to inspect and verify the existence of this material. (Size, shape, and color of the pieces are all job-specific and so often photos are deemed sufficient proof, but not on this project.) And we had to reimburse the owner or architect for time and mileage. That came to some hundreds of dollars and the fabricator was not so desperate as to pay the equivalent of a 9% APY to get his money a few months sooner. Not a big deal, we’ll wait for installation in order to get paid.

Early in the project, the GC had requested dividing the contract up so that most of it could be run through a minority supplier to help him meet DBE goals (again, stimulus money implies stimulus rules) that he had not anticipated in his bid. I agreed (the GC was paying the cost of running it through the distributor). The only impact I anticipated was sending out additional invoices. No biggie. After fiddling with waivers, we know to expect a pair of checks, $5,000 from the GC to Cary Concrete Products, Inc. and a $45,000 joint check payable to Cary and to the minority distributor who had already endorsed it over to us. I was out of town but had made sure that the outgoing checks to the fabricator had been cut and signed. All the office had to do was deposit the incoming checks and mail the outgoing check. I got a call asking me about endorsement. The other party’s endorsement plus our endorsement stamp could not fit above the line that boldly said:
DO NOT WRITE STAMP OR SIGN BELOW THIS LINE

This one was new to me, and I was clueless. I instructed the office to not use the ATM card, but instead to go into the bank and ask the teller. They should know. The very surprising answer (ultimately from the manager), was in effect, “We don’t care where you endorse it, because we consider it a 3rd party check and we will not accept it for deposit.” This sort of joint check is common in the industry but the branch manager (a high-faluting title for a person who works in a too-big-to-fail bank and has almost no authority beyond reversing fees if you ask nicely) was absolutely clueless about standard practice in our industry. “Bank rule: we can only accept joint checks if both parties are named on the deposit account.” Might make sense on personal accounts, but not here on Planet Commercial Construction. He was unable to comprehend the difference between this joint check and a personal check made out to two people and intended for both. Even after explaining to him how and why this was a normal business practice in the industry, he told me that if the check were “or” instead of “and” it would be fine. I began explaining to him that if it were “or” the other party could negotiate it and either run away with the money or use it as interest free loan until he felt like paying me (been there, done that…). But the guy was not interested in learning anything new and my task did not include educating him. The GC and their local bank were helpful and cooperative and ultimately (after a delay in the flow of funds plus a lot of wasted time and energy) we sent the check over to the local bank on which it was drawn and they will send me back a check payable solely to Cary Concrete Products.

This will happen again. And two trends seem clear:
- more banks will become skittish about joint checks
- more companies in the stream of payments will be folding
Therefore: let’s get ready and skip the whining.

I myself am trying to get Bank of America (probably a bad choice of bank for a subcontractor, but the relationship arose via banking mergers and acquisitions) to define what they will require in the future in order to handle such a check. Some banks may require a written joint check agreement. Other banks may have accepted them in the past, but will change their policy without telling you. Our recommendation: have a discussion with your banker about this if you expect to get joint checks. In some jurisdictions, in some circumstances, joint checks, especially with a written joint check agreement, also offer you protection against later reversal of a payment as a preferential payment when a higher tier up goes bankrupt. A good brief discussion of this and of joint checks, especially for suppliers, can be found at http://www.nacmne.com/jointcheck.htm. Another short discussion of this topic, written from the perspective of a GC (who has to worry that a 2nd tier sub or supplier not paid by the 1st tier can make a bond claim against the GC – a tactic I have successfully used to force collection) is at http://www.roadsbridges.com/articles/SoreJoints.pdf.