Extended Warranty Costs

Log Out | Topics | Search Moderators | Register | Edit Profile

Author Message Ellis C. Whitby, PE, CSI, AIA, LEED Senior Member Username: ecwhitby Post Number: 379 Registered: 03-2003 Posted on Wednesday, March 07, 2018 - 08:13 am:    I was asked recently for a "rule of thumb" for the increased cost for extending the standard 1 year project "warranty" (or Contractor call back period) to 2 years. I came up blank since the increase would depend on the project type and scope. Does anyone have sources for rough numbers (percentage of construction cost) for different project types? ken hercenberg Senior Member Username: khercenberg Post Number: 1156 Registered: 12-2006 Posted on Wednesday, March 07, 2018 - 09:01 am:    I've been asked this before by clients and have included a correction period extension as an add alternate. Most bidders refused to consider it. Several suggested that the client consider purchasing extended warranties for those items they were most concerned about. One suggested that it would cost the client less to hire a dedicated on-site building engineer or maintenance person for a year since that's what they based their add-on price on. Ellis C. Whitby, PE, CSI, AIA, LEED Senior Member Username: ecwhitby Post Number: 380 Registered: 03-2003 Posted on Wednesday, March 07, 2018 - 11:32 am:    Ken; Thanks. Interesting Contractor responses. I guess the market conditions will impact the responses. I think the project I was asked about is in California. A public project. I have no idea what the responses will be for that one. David G. Axt, CCS, CSI ,SCIP Senior Member Username: david_axt Post Number: 1639 Registered: 03-2002 Posted on Wednesday, March 07, 2018 - 06:09 pm:    I too have been asked to extend the correction period from 1 to 2 years. I recommend the Owner speak with their attorney since the correction period is spelled out in AIA A201 and I avoid messing with that document. It's really kind of silly. The reason for the year correction period is to put the building through a four season cycle. Anything that is going to break will usually break within the first few weeks or months. No contractor is going to want to "insure" the building for an additional year. Just like every material good, if a building is well maintained, it should last for a long time. David G. Axt, CCS, CSI, SCIP Specifications Consultant Axt Consulting LLC John Bunzick, CCS, CCCA, LEED AP Senior Member Username: bunzick Post Number: 1738 Registered: 03-2002 Posted on Wednesday, March 07, 2018 - 06:26 pm:    It would most likely be cheaper and more directed to simply hire the appropriate maintenance and service contractors on a case-by-case basis for the second year. Plus, the owner still has the protection of making a claim of a construction defect within the state's statute of repose to cover true defects. David J. Wyatt, CDT Senior Member Username: david_j_wyatt_cdt Post Number: 231 Registered: 03-2011 Posted on Thursday, March 08, 2018 - 09:55 am:    To understand this issue better, contact a surety that provides bonds for construction projects. Contractors are limited by what their sureties can provide. Ronald J. Ray, RA, CCS, CCCA, CSI, AIA Senior Member Username: rjray Post Number: 173 Registered: 04-2004 Posted on Thursday, March 08, 2018 - 10:14 am:    Back in the day when I was a real architect, I used Document 006100 - Bond Requirements, which expanded on the bond requirements of AIA A201. Within Document 006100 I included: “The correction period required by Document 007200 - General Conditions (AIA Document 201-2007) Section 12.2.2, the warranty required by Document 007200 - General Conditions (AIA Document 201-2007) Section 3.5, and the special warranties required by individual Sections of the Specifications, shall be incorporated into and made part of the Performance Bond.” This was never challenged in court, so I do not know if it would have been enforceable. But not a single surety company commented in the 30 years of its use on hundreds of projects. Sheldon Wolfe Senior Member Username: sheldon_wolfe Post Number: 1005 Registered: 01-2003 Posted on Thursday, March 08, 2018 - 11:02 am:    A couple of times, for public sector projects, we changed the correction period to two years. At the time, I asked a couple of bonding agents how much this would add to the cost, and was told there would be no difference in the cost of the bond. The two-year correction period was changed in the supplementary conditions, rather than hidden away by editing the general conditions, so bidders were aware of what we did. Also, I believe it was pointed out during the pre-bid meetings. There were no complaints from bidders, but because it was part of the contract, we didn't know how it affected the contractors' bids. I don't recall if the contractors were called back during the corrections period. I never specified a one-year warranty, and instructed our construction administration staff to return any that are submitted; the provisions of the correction period are far more powerful. Because manufacturers' warranties typically take effect before substantial completion, the correction period effectively removes any discussion of when a one-year warranty takes effect if a manufacturer wants to argue. Michael Chusid, RA FCSI CCS Senior Member Username: michael_chusid Post Number: 377 Registered: 10-2003 Posted on Thursday, March 08, 2018 - 12:11 pm:    Sheldon Manufacturers hide their warranty limitations in many places - in catalogs, in fine print on invoice forms, etc. They are not always separate documents labeled "warranty". How did you get staff to ferret these out to return? Is it the design professional's responsibility to reject these warranties? The relationship between the manufacturer and the contractor is none of the architect's business. Michael Chusid, RA FCSI CCS 1-818-219-4937 www.chusid.com www.buildingproduct.guru Sheldon Wolfe Senior Member Username: sheldon_wolfe Post Number: 1006 Registered: 01-2003 Posted on Thursday, March 08, 2018 - 02:19 pm:    Given the context, I think it was obvious that I was referring to documents specifically identified as warranties, which are common; my understanding is that some firms ask for one-year warranties. Interesting point about the warranty information in other documents. Carrying that logic on, everything a manufacturer publishes could be considered part of their submittals, in the same way that reference standards incorporate other reference standards. Once you accept one document as a submittal, are you also accepting everything else? As for rejecting one-year warranties, does accepting them bind the client to terms less favorable than those expressed in the correction period? Dave Metzger Senior Member Username: davemetzger Post Number: 726 Registered: 07-2001 Posted on Thursday, March 08, 2018 - 04:46 pm:    That's a good question, Sheldon, as to whether accepting a one-year warranty binds the client to terms less favorable than those expressed in the correction period. The one-year correction period is a contractual obligation between the general contractor and the owner. One-year warranties would be coming from manufacturers, not the GC. Even if the GC tries to say a one-year warranty was part of his contract with the sub or manufacturer, that is a private matter between the GC and his subs; if the warranty is not a required submittal, the architect is within her right to reject it. The 2017 edition of A201, 3.12.4, explicitly states "Submittals that are not required by the Contract Documents may be returned by the Architect without action." But I wouldn't want to be in the position of accepting a one-year warranty and then trying to test it with the correction period provisions.