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Subcontractors, Beware! Your Assumptions Can Cost You

One of the most dangerous words in the English language for subcontractors is “assume.” For example, do you assume that your company will be reimbursed for costs incurred as a result of project delays caused by another subcontractor on a project or by the general contractor? If the subcontract document doesn’t say it and the general contractor is not specifically obligated to do so by the general conditions, you assumption probably will leave you paying for de-and re-mobilization cost, and other costs, out of pocket! Without sound planning this and many other assumptions are, well, just that – assumptions without basis in fact. And they can cost you.

The American Subcontractors Association’s (ASA) white paper, “What’s NOT ‘In’ the Contract,” gives real-life examples of where courts have issued conflicting opinions on what the general contractor is responsible for when the subcontract document is silent on an issue. In some cases, courts have found that the general contractor is responsible for when the subcontract document is silent on an issue. In some cases, courts have found that the general contractor is responsible for subcontractor’s costs. Other courts have come to the opposite conclusion. The white paper points out several examples of common dangerous assumptions for contractors:

• The general contractor will provide facilities and storage areas onsite: stairways; security for equipment; adequate parking; and access to toilets, electricity and lighting.

• The general contractor must properly schedule and coordinate work so that the subcontractor can complete its work according to the project schedule.

• The general contractor must pay for changes in work that result form schedule changes.

• Someone else (i.e. the owner or general contractor) is responsible for providing property insurance in the work area.

The point of examining such assumptions is to discover how best to ensure that you, as a subcontractor, have properly anticipated your responsibilities and costs for each project.

ASA’s white paper looks at different options, including asking general contractors to clarify, in writing, the meaning of language describing the project requirements; conditioning bids and contracts with language describing the project requirements; conditioning bids step-by-step to identify assumptions reflected in cost estimates. One particularly useful resource for identifying assumptions is the “Guideline on Site Logistics” developed by ASA, the Associated General contractors (AGC) of America, and the Associated Specialty Contractors. The guideline is publicly available online.

In addition, the white paper compares and contrasts the subcontractor’s responsibilities under model subcontract documents published by AGC, the American Institute of Architects, and the Design-Build Institute of America.

For more information, visit ASA’s Web site and click on “Stand Up! ForSubcontractors” or call ASA at (703) 684-3450.

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