Getting the Contractor to close out t...

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Author Message David Axt, AIA, CCS, CSI Senior Member Username: david_axt Post Number: 912 Registered: 03-2002 Posted on Wednesday, September 26, 2007 - 05:56 pm:    On a few projects in the office we are having a hard time trying to get the Contractor to close out the project. On one project in particular the Contractor is leaving a significant chunk of money on the table.....so money can't be the motivating factor. Any ideas? Stephan Reppert CSI, CCCA, assoc. AIA Senior Member Username: steprepp Post Number: 16 Registered: 09-2003 Posted on Thursday, September 27, 2007 - 07:07 am:    Invoke the surety if project is bonded Scott Michael Perez AIA, CSI, CCS, CCCA, MAI, LEED AP, NCARB Senior Member Username: sperez Post Number: 9 Registered: 01-2007 Posted on Thursday, September 27, 2007 - 07:15 am:    One idea that is currently being floated around is the concept of having an A/E "Punch Team". This is added as a clause in the contracts that requires the Owner and Contractor that the A/E will come in after a period of time with new forces to close out the contract if the Contractor elects to forego their money and not finish the job. The big issue here is that it keeps the Owner happy and in the future, when project arise, the very last thing they remember is that the A/E was the one that helped to get their project completed when the Contractor would not follow through. Granted, it takes on some additional liability, but when you run into the issue o losing work down the road, it is worth the money! We have an example where a client recalled that a contractor on one project did not finish out several items on a punch list from two and a half years ago. One of the items resulted in a lift being red-tagged for accessible use by the building inspector. To this day the lift is still not usable, and when a new project came up, facilities and others said why would they want to hire the architect again, they could not get the lift operable on the first project?...just because a contractor did not come in to correct his drywall mistake of a whopping three-quarters of an inch! Something to think about. David Axt, AIA, CCS, CSI Senior Member Username: david_axt Post Number: 915 Registered: 03-2002 Posted on Thursday, September 27, 2007 - 01:32 pm:    According to AIA A201 that the Owner can complete the Work with their own forces. The problem with doing the work with separate contractors is the liens that the subcontractors may place on the project. It still boggles my mind that a contractor would not want to hurry up and finish the project and be done with it....and get their money. Stephan Reppert CSI, CCCA, assoc. AIA Senior Member Username: steprepp Post Number: 17 Registered: 09-2003 Posted on Friday, September 28, 2007 - 07:20 am:    Did the Contractor front load the first few requisitions for payment thereby obviating any retainage power the Owner might rightfully hold? David Axt, AIA, CCS, CSI Senior Member Username: david_axt Post Number: 916 Registered: 03-2002 Posted on Friday, September 28, 2007 - 12:33 pm:    No....and he left $1.2 million dollars on the table! Stephan Reppert CSI, CCCA, assoc. AIA Senior Member Username: steprepp Post Number: 18 Registered: 09-2003 Posted on Friday, September 28, 2007 - 01:27 pm:    Terminate for cause and bid the remaining portion as a new project (time/money) or invoke the surety. Stephan Reppert CSI, CCCA, assoc. AIA Senior Member Username: steprepp Post Number: 19 Registered: 09-2003 Posted on Friday, September 28, 2007 - 01:36 pm:    If the contractor is in arrears to his subs, look into the legal aspects of closing the project off and any equipment on the owner's property could be held as collateral until contractor's payment to the subcontractors. This is not advice. This is commentary. Steve Gantner, CSI, CCCA New member Username: sgantner Post Number: 1 Registered: 08-2007 Posted on Monday, October 01, 2007 - 11:48 am:    I would be very careful if you terminate for cause and proceed to re-bid. We have an Owner who did this because the quality of work was so poor and finishing the job was a huge problem. That was over a year ago, the attorney's are still fighting it out. If the project is bonded, start there. The bonding companies may have procedures that are slightly different than the AIA documents. John Regener, AIA, CCS, CCCA, CSI, SCIP Senior Member Username: john_regener Post Number: 341 Registered: 04-2002 Posted on Monday, October 01, 2007 - 12:31 pm:    Do liquidated damages apply? Ralph Liebing, RA, CSI Senior Member Username: rliebing Post Number: 704 Registered: 02-2003 Posted on Monday, October 01, 2007 - 02:05 pm:    Perhaps appropos-- from Construction Claims Online; September 17, 2007 COURT CALLED UPON TO DETERMINE DATES OF PERFORMANCE PERIOD Court of Civil Appeals of Alabama When a podiatrist doesn’t set an official start date for construction of his new office, a state court must step in to do it. The court also determines the completion date and in so doing, sidesteps the original claim for liquidated damages. Subscribers: click here for the full story Non-Subscribers: click here to subscribe Pay per view ($5.00) Phil Kabza Senior Member Username: phil_kabza Post Number: 283 Registered: 12-2002 Posted on Monday, October 01, 2007 - 08:43 pm:    A few things that sometimes help get a project closer to completion: A project closeout planning meeting min. 90 days before Substantial Completion to force some closeout planning. A requirement that the Contractor keep a full time superintendent on the project until final completion - the A201 backs that up. Adept handling of retainage and final payment Even more adept handling of defective work during the course of the work - don't allow settlement to wait until the end. Don't terminate a project at 99.5 percent complete; let the owner declare it done, pay it off, keep enough money out to finish the work, and do so. David Axt, AIA, CCS, CSI Senior Member Username: david_axt Post Number: 918 Registered: 03-2002 Posted on Tuesday, October 02, 2007 - 01:13 pm:    Phil, I like your suggestions! I especially like the idea of keeping a full-time superintendent on the job. I wonder if there is also a way to keep the trailers on the site until the job gets closed out. I figure that the more the contractor spends his own money, the more he will want to finish the job. I also believe that we should continue to hold progress meetings even if no work is being done. Again it will waste the contractor's time (and unfortunately the architect and owner) but may reinforce that items are not getting done. Maybe the more we are in the contractor's face the more he will also want to be done with the job. John Bunzick, CCS, CCCA Senior Member Username: bunzick Post Number: 793 Registered: 03-2002 Posted on Tuesday, October 02, 2007 - 02:26 pm:    On many of my projects the contractors have switched out the superintendent with a new person at closeout. At first some owners were wary, but it was actually better because these individuals were skilled craftsman who actually completed much of the punch list work themselves. They tracked what was not done, nagged subs, worked up backcharges, and did what their skills permitted them to do. When there's only a half dozen tradespeople on the site, you don't need a $150,000 a year super watching them. You want the guy with the tool box. Ralph Liebing, RA, CSI Senior Member Username: rliebing Post Number: 709 Registered: 02-2003 Posted on Tuesday, October 02, 2007 - 02:27 pm:    Mr. Axt, isn't there an implied peril in your solution in that while "wasting the contractor's" time and money, you also are similarly impacting YOUR time and money? David Axt, AIA, CCS, CSI Senior Member Username: david_axt Post Number: 919 Registered: 03-2002 Posted on Tuesday, October 02, 2007 - 04:23 pm:    Ralph, Yes. There is the danger of wasting everybody's time but......if the owner and architect keep after the contractor maybe we can pressure him to finish. Plus we (architect) ask for additional services since the project did not closeout when it was supposed to. This will put additional pressure on the owner to put pressure on the contractor. The owner might even be able to bill the contractor for the architect's time! I believe it is too easy to just let the contractor walk away from the job. We (owner and architect need to stay in the contractor's face and make OUR problem HIS problem. I see no reason not to have progress meetings even if no progress is being done. It will put the contractor in the hot spot and hopefully instill guilt. The way I keep notes, I keep repeating the line item until it gets resolved. Then it is taken off the list. It looks bad on the contractor if the list grows longer with no action. David Axt, AIA, CCS, CSI Senior Member Username: david_axt Post Number: 920 Registered: 03-2002 Posted on Tuesday, October 02, 2007 - 04:27 pm:    John, You are missing the point. I want the $150K super at the job site. I don't want him working at another job until mine is done. I want the contractor to be motivated to get the job done so that he can send his $150K guy elsewhere and use him more effectively.....or he can sit at my job and twiddle his thumbs. I don't care. It's I'm not paying him. ;-) Ralph Liebing, RA, CSI Senior Member Username: rliebing Post Number: 711 Registered: 02-2003 Posted on Wednesday, October 03, 2007 - 07:02 am:    For sake of discussion, how about a contractual provision in the order of-- "After the date of the time of completion the job site will be closed to all contractors. All work left unfinished will be completed by Owner and back-charged to the proper contractor. All supplies, materials and equipment of the contractors, left at the site, shall become the property of the Owner and the proceeds from the sale thereof shall be used to pay for completion of the unfinished work". John Bunzick, CCS, CCCA Senior Member Username: bunzick Post Number: 794 Registered: 03-2002 Posted on Wednesday, October 03, 2007 - 08:32 am:    On projects where I've had the second super finishing up the punch list, there was no significant problem getting the work done. The reality for the contractor (and the owner) is that there is no way that the contractor will let the high-paid super be underproductive. So, they've started the next project (from my trailer) already. Besides, I don't want or need to unnecessarily cost the contractor money--that serves no one's ends. The goal is to get the project done, and if the "close out super" is the guy to do it, I'm fine with it. Most contracts already allow the owner to complete work the contractor won't. I've seen this happen only once, on a phased project where the owner finished parts of the initial phase and backcharged the GC. It worked--next phases were done better. I think an important issue is that the owner (and the architect and contractor) get tired of the project dragging along when there's punch list items not getting done. The owner is often quite happy to take the money and get it over with. Reality is that a lot of the punch list items are things like touching up paint, or replacing a tile that has too big a gap at the door jamb. In the end, the owner is content to live with that. Don Harris CSI, CCS, CCCA, AIA Senior Member Username: don_harris Post Number: 157 Registered: 03-2003 Posted on Wednesday, October 03, 2007 - 09:14 am:    I agree completely with John. Many of our projects end this way. The experienced super has no desire to police a punch list. The person, usually less experienced, that takes over wants to impress the boss so they can be the next high paid experienced super. It really works. It's simple psychology and economics. George A. Everding, AIA, CSI, CCS, CCCA Senior Member Username: geverding Post Number: 356 Registered: 11-2004 Posted on Wednesday, October 03, 2007 - 10:54 am:    ...and there is nothing wrong with an experienced super closing out, either. One of the best close outs I ever experienced was on a large assisted living project where the contractor, as part of his typical practice, had a "Punch Team" consisting of a senior level tool-carrying super and two to four workers. Their sole responsiblity was going from job to job doing the close out. Those guys and gals were efficient, professional, and they took care of every detail, because that is all they did. David Axt, AIA, CCS, CSI Senior Member Username: david_axt Post Number: 921 Registered: 03-2002 Posted on Wednesday, October 03, 2007 - 01:45 pm:    This "closeout team / super" sounds very interesting. We should inquire about this at the pre construction meeting. I might even see if I can work something into my specs or advise the owner to put something in the general conditions. BTW, I have no problem with onerous closeout requirements for the contractor in the general conditions. No contractor will argue about these requirements since doing so he will reveal that he does not plan to finish on time. ;-)