| Author |
Message |
Richard Fost AIA, CSI, CCS
Member
Username: richardfost
Post Number: 3
Registered: 12-2008
| | Posted on Thursday, January 24, 2013 - 11:52 am: |    |
Working with a public school district, I am being asked by the Owner (the district) to specify that both the Contractor's correction period AND the manufacturer's warranties are to start at final completion rather than at Substantial Completion. Has anyone worked on public projects on which that was requested by the Owner? If so, was it successful? Or was there significant push-back from contractors and manufacturers? Was there an increase in project cost? |
Phil Kabza
Senior Member
Username: phil_kabza
Post Number: 519
Registered: 12-2002
| | Posted on Thursday, January 24, 2013 - 12:58 pm: | |
While it is good to find ways to stimulate contractor performance during the grey area between substantial completion and final completion, I think there are better ways that accomplish that without affecting so many parties. The change poses the problem that manufacturer's products would be subjected to one or more months of additional owner occupancy and use while under warranty, up to some indeterminate amount of time if final completion was delayed for some reason. I can't see that the client's request is particularly well-informed and would advise against it, as it should result in increased costs to the owner, not to mention increasing the likelihood of disputes and administrative time (including the architect's time). I suggest submitting a proposal for additional CA services related to having to administer this request. |
John Bunzick, CCS, CCCA, LEED AP
Senior Member
Username: bunzick
Post Number: 1476
Registered: 03-2002
| | Posted on Thursday, January 24, 2013 - 01:06 pm: | |
This sounds like a classic attempt by owners to ratchet up the rules because they think contractors can't follow the rules. It doesn't really work that way. One simple solution is to change the correction period from a year to, say, 18 months, starting at substantial completion. Much easier to manage. |
John Hunter
Senior Member
Username: johnhunter
Post Number: 103
Registered: 12-2005
| | Posted on Thursday, January 24, 2013 - 05:14 pm: | |
We have a number of school district clients whose Contract simply does not include Substantial Completion - it includes Final Completion only. Since "Substantial Completion" doesn't exist under the terms of the agreement, the only option we saw was to define the starting point of all warranties as Final Completion. We've edited that into the warranty language in every Section, and included language in the Supplemental GC's to the effect that "The term 'Substantial Completion' shall be changed to 'Final Completion' wherever it occurs" to cover those instances we might have missed.
There really hasn't been very much push-back on this, and I suspect it's had virtually no impact on cost, partly because bidder's aren't particularly focused on warranty language during the bidding process and partly because the time lag between "Substantial" and "Final" Completion on these projects has been one or two months. |
spiper (Unregistered Guest)
Unregistered guest
| | Posted on Friday, January 25, 2013 - 10:01 am: | |
In our area school district attroneys have been the ones pushing for extended warranty periods (2 rather than 1 year) and with language about the warranty starting on final and not substantial completion. We have seen push-back by contractors on this and claims that it was increasing cost (no numbers to speak of just talk). The big problem we are anticipating is the sub may accept the 2 year warranty and warranty start date and the sub may be contracturally bound by these dates. However if the manufacturer has a warranty that states otherwise that is all they will honor. The difference between the two could fall on the sub and any big issues on failed equipment or products will simply bankrupt the sub.
The manufacturer is simply selling a product and as such is not always legally bound by the contract so they do not need to honor the spec and many times will not. Many subs will accept this provision and most will be prepared to honor it as well. But alas the ones willing to actually honor this will be bidder #3 or #4 but rarely bidder #1.
We are not convinced that these additional protections are actually protection at all. It may simply provide the advantage (in a public bid project) to the contractor who intends to renege on these provisions anyway if a claim is made. |
Anne Whitacre, FCSI CCS
Senior Member
Username: awhitacre
Post Number: 1296
Registered: 07-2002
| | Posted on Friday, January 25, 2013 - 06:17 pm: | |
I was just at a presentation that discussed extended warranty periods (generally more than 2 years) as an issue from the Surety's point of view -- it ties up the contractor's bonding, and is much harder to risk manage. In a bad economy, contractors may not want to raise any objections. |
Louis Medcalf, FCSI, CCS
Senior Member
Username: louis_medcalf
Post Number: 11
Registered: 11-2010
| | Posted on Monday, February 18, 2013 - 04:38 pm: | |
The statute of repose in some states [such as Tennessee] includes a definition of Substantial Completion that could apply even if the conditions of the contract do not define and use that term. |
John Regener, AIA, CCS, CCCA, CSI, SCIP
Senior Member
Username: john_regener
Post Number: 610
Registered: 04-2002
| | Posted on Monday, February 18, 2013 - 08:58 pm: | |
My understanding, in California for public construction, that there is no "Substantial Completion." There is "Completion."
As a result ... and using some good ol' specriter weasel wording ... I specify the start dates of warranties/guarantees as the "date established in the Notice of Completion." The filing of the Notice of Completion typically commences the period for filing of liens and is (as far as I know in California") applicable to all projects.
See http://www.pillsburylaw.com/publications/significant-changes-to-californias-mechanics-lien-law-coming-july-1-2012
There is a paragraph that discusses what "completion" means. |
David Axt, AIA, CCS, CSI
Senior Member
Username: david_axt
Post Number: 1325
Registered: 03-2002
| | Posted on Thursday, April 18, 2013 - 03:58 pm: | |
I have written numerous specifications for public school projects. I too have come across school districts that extend the start of the warranty period to Final Completion instead of Substantial Completion. A few of the school districts extend the Contractor Correction period to 2 years from 1 year.
I have explained to the school districts, and the project manager, about the convention of Substantial Completion being the start of the warranty and a 1 year Correction Period, but that discussion usually falls on deaf ears. They want what they want. I don’t really fight it because I figure that adults can sign a contract and agree to anything. So far, I have never heard of any problems that have cropped up due to these extensions. My guess is that after the building is occupied that the Contractor and Owner forget about the terms of the original Contract.
On the flip side, I know a roofing manufacturer who clearly states their warranty begins at installation. If you think about it in order to dry in a building a roof is one of the first items installed. The roof could be on a building for a year or two before the building is Substantially Complete. With this manufacturer if the Owner wants a warranty to start at Substantial or Final Completion then the Owner must purchase an extended roofing warranty. |
John Regener, AIA, CCS, CCCA, CSI, SCIP
Senior Member
Username: john_regener
Post Number: 626
Registered: 04-2002
| | Posted on Thursday, April 18, 2013 - 08:53 pm: | |
To further cloud the issue ...
There is the point at which the Owner takes "beneficial occupancy" of the facility and starts using the stuff that has been constructed. That is, gizmos are put into service and wear and tear commences.
There is also something I'm grappling with (and should be a separate discussion topic, I believe) and that is commissioning. Is the project "complete" when commissioning has been satisfactorily completed and compliance with the Basis of Design and other properties of the design (construction contract) have been validated? |
Nathan Woods, CSI, CCCA, LEED AP
Senior Member
Username: nwoods
Post Number: 532
Registered: 08-2005
| | Posted on Thursday, April 18, 2013 - 09:11 pm: | |
I think Substantial Completion can only occur after Certificate of Occupancy (or sometimes a Temporary CofO) from the AHJ (signifying that all outstanding code related issues are complete), and when the Owner takes beneficial occupancy. Those two events are key. |
John Regener, AIA, CCS, CCCA, CSI, SCIP
Senior Member
Username: john_regener
Post Number: 630
Registered: 04-2002
| | Posted on Thursday, April 18, 2013 - 10:38 pm: | |
This kinda gets complicated.
The Uniform Commercial Code sez something like, "one year warranty unless a limited warranty (less than one year) is stated." When does the "one year" commence according to the UCC? How does this relate to the Correction Period applicable to projects using AIA A201 General Conditions of the Contract? (I'm too tired and lazy right now to research the matter).
According to State lien laws, when does the lien period commence (filing of Notice of Completion?) and how long does it last so that "Completion" or "Final Completion" can be determined? Does it vary by State and jurisdiction? Do provisions in the construction contract documents regarding the completion date influence this? Is Completion not merely the sign-off of all required inspections by the Authority Having Jurisdication (AHJ) and waiting out the lien period? The Contract "Completion" date sure is significant for delay claims and liquidated damages. (Note: Liquidated damages is not the result of the first rain, when the roof leaks).
I also assume that Completion could also be affected by sign-off by other authorities such as the licensing authority for a medical project.
How does commissioning affect the date of Completion, for approval by the AHJ and acceptance by the Owner? Is full-on, sure-enough, you-betchum Completion only when the Owner determines that commissioning has demonstrated that the facility is acceptable? And what about delivery of all data required for completion of an application for sustainable design certification (LEED, etc.)?
There are also significant issues when considering "completion" related to early construction activities, such as grading and foundation work, for release of retainage related to these activitie.
My copy of "Specs for Dummies" doesn't adequately address these. Is there a more authoritative resource? |
J. Peter Jordan
Senior Member
Username: jpjordan
Post Number: 554
Registered: 05-2004
| | Posted on Friday, April 19, 2013 - 10:39 am: | |
Substantial Completion (and even final completion) can happen well before a Certificate of Occupancy is issued. Think core and shell work or even "cold dark shell" projects. I have sometimes run into single-story developer projects that consist of side and rear walls, roof, and general building services (electrical, plumbing, and sewer), but no service distribution, no slab on grade, and no storefront. All of those items become tenant responsibilities. You can sometimes run into this on institutional work as well. I am currently working on specifications for build-out of floors for medical and justice facilities (two different projects). I would think that Certificates of Occupancy were issued for other parts of the building that were finished, but not these particular floors. In all of these cases, Certificates of Substantial Completion and Completion were issued without C of O being issued for all or part of the Work. |
Ronald L. Geren, AIA, CSI, CCS, CCCA, SCIP
Senior Member
Username: specman
Post Number: 1108
Registered: 03-2003
| | Posted on Friday, April 19, 2013 - 11:23 am: | |
Peter hits on an interesting point. I covered this in an article last year (http://www.specsandcodes.com/Articles/Keynotes%20No.%2011%20-%20Project%20Closeout.pdf).
As we all know, substantial completion is the point in time when the building can be used by the owner for its "intended use." A project that is a core and shell building is not intended to be occupied...at least not yet. The intended use of a core and shell project is to provide a structure for the owner to lease or sell to tenants for subsequent tenant improvement projects (those T.I.s will require certificates of occupancy upon completion). If that "intended use" is not achieved, then the project is not substantially complete.
Many jurisdictions issue a "Certificate of Completion" for such projects. Thus, when the jurisdiction has accepted the project as complete, then the A/E should accept it as complete, provided there are no other outstanding issues that prevent the owner from leasing or selling all or portions of the building.
Ron Geren, AIA, CSI, CCS, CCCA, SCIP
www.specsandcodes.com |
Anne Whitacre, FCSI CCS
Senior Member
Username: awhitacre
Post Number: 1339
Registered: 07-2002
| | Posted on Friday, April 19, 2013 - 01:59 pm: | |
to answer Mr. Regener's post: my understanding of the UCC is that it applies to products and not necessarily services. under the UCC, the product manufacturer can start the warranty period at the time of delivery to somewhere else -- the Home Depot, the contractor's warehouse, or the construction site.
I've often done rolling substantial completion in high rise buildings, where a floor(s) is punched; and the warranty period starts at that time for a very defined scope of work. its relatively common to do that in core and shell work, especially if the building is more than a dozen stories tall. The documents are re-defined to take care of that.
And, oddly enough, I agree with David, that adults can write any contract they want, as long their sureties, bankers and attorneys buy in. |
Ronald L. Geren, AIA, CSI, CCS, CCCA, SCIP
Senior Member
Username: specman
Post Number: 1109
Registered: 03-2003
| | Posted on Friday, April 19, 2013 - 02:22 pm: | |
To add to Anne's comments, the UCC provides a warranty between buyer and seller, and in nearly all cases for a construction project, the actual buyer is not the owner--it is more likely that a subcontractor is the buyer, who gets reimbursed through a pay application. The UCC has little to no affect on construction warranties.
Ron Geren, AIA, CSI, CCS, CCCA, SCIP
www.specsandcodes.com |
spiper (Unregistered Guest)
Unregistered guest
| | Posted on Friday, April 19, 2013 - 01:23 pm: | |
"Beneficial occupancy" and "intended use" could easily be arguable points on individual components or systems long before the complete project reaches these same target dates.
as an example: if a project is being constructed and all temporary heat requirements are the responsibility (finacially speaking) of the Owner it may become advantageous to use the new Air handling system for this heat. We have had projects where we added filters and prefilters to the unit, ran temporary flexible duct, sealed all permanent ductwork to eliminate construction dust and included a complete clean of the unit itself before putting it into service for the permanent occupancy. This can save the Owner considerable money in the right situation.
It can also be argued that if the unit is being used to heat and condition the space then it is functioning for it's "intended use" and at the Owner's benefit. Whenever we have done something like this the clock on any extended warranty items for the air handling unit would start when it was started up. This means more than one substantial completion date depending on what area, system, component was put to use and when.
Any attempt to make all projects and all systems within those projects adhere to a single date is optimum but not always practical. Furthermore often the determination of such things is not up to the Owner or the Architect. "You want to use my Air Handling Unit for temporary heat? Fine, but the warranty starts now or no deal" |
David Axt, AIA, CCS, CSI
Senior Member
Username: david_axt
Post Number: 1326
Registered: 03-2002
| | Posted on Friday, April 19, 2013 - 06:23 pm: | |
I worked on a project with a "staggered" Substantial Completion. Basically the Contractor was behind schedule and was playing games to avoid liquidated damages.
In a nut shell the staggered completion dates went something like this. The administration portion of the building was declared substantially complete so administrators could move in and start getting the school ready. Then the library was substantially complete so books shelved and librarian could set up shop. Then the classrooms were finished. Then finally the gym was completed after the school was open. The kids had to play outside for a few weeks.
This school was all one contiguous building under one roof. So when do the warranties start? Would the portion of the roof over the gym have a longer warranty period than the roof installed over the administration wing of the building? Do the toilet flush valves have different warranty periods depending on their location in the building, even though the valves were installed at the same time? As you see, this could be total chaos. This is an instance where one could argue to have the warranties start at Final Completion.
Also, as Phil mentioned, having the warranties (and especially the Contractor Correction Period) start at Final Completion holds the Contractor’s feet to the fire and encourages the Contractor to finish up quickly. The staggered completion date project mentioned above took over nine months to finally complete after the last portion was Substantially Complete. One of the high school projects I worked on took 18 months to get to Final Completion. |
Ronald L. Geren, AIA, CSI, CCS, CCCA, SCIP
Senior Member
Username: specman
Post Number: 1110
Registered: 03-2003
| | Posted on Friday, April 19, 2013 - 06:46 pm: | |
If the AIA document is used (AIA Document G704), then it needs to be completely filled out, and warranties is an item that is specifically identified. The form states that applicable warranties commence as of the date of substantial completion. But if the project is phased, then a detailed list of warranties that DO NOT commence must be listed.
These would definitely be for items not in the area where substantial completion is achieved. However, using the roof as an example, the roof can be excluded until all portions of the work under the roof is determined to be substantially complete.
As the A/E on a project, you have the authority to make those determinations, and if the owner and contractor sign-off on the Certificate, then they have accepted those conditions.
Bottom line: Don't take the preparation of the Certificate of Substantial Completion lightly.
Ron Geren, AIA, CSI, CCS, CCCA, SCIP
www.specsandcodes.com |
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