Be Prepared with the Right Tools: Minimize and Control Clause-Related Risks
By Courtney Little
One-sided, poorly-drafted con-tracts and glazing subcontracts complicate what should be effective and efficient contract performance. Improper risk allocation can cause additional and unnecessary costs to all participants in a construction project resulting from bid contingencies, dispute distractions, delays, disruptions and overall increased transaction costs. Onerous contract and subcontract clauses, which require contractors and subcontractors to assume in-equitable and uncontrollable risks, will impact the working relationships directly and negatively to the detriment of the project itself.
In such a hostile economic environment, glazing subcontractors must take all reasonable precautions to minimize and control risks. Successful subcontractors educate their senior managers and other key personnel about key subcontractor provisions and how they impact each worker’s job. There are numerous tools compiled by the American Subcontractors Association (ASA) available to its members to teach estimators, salespeople and foremen to keep subcontract terms in mind during their jobs. Perhaps the tools most appropriate for this use are the Subcontractors Negotiating Tip Sheets and the tongue-in-cheek Subcontractors Are Prey Awards, which highlight some of the most commonly encountered terms we should avoid.
ASA’s Subcontractors Negotiating Tip Sheets are designed to provide a subcontractor with the information it needs to negotiate a subcontract clause. These documents cover a host of topics to help subcontractors navigate harmful subcontract language and provide suggested responses to prime contractors’ excuses. Some of the areas covered include scope of work, subcontractor responsibilities, contractor responsibilities, progress schedule, changes, payments, indemnity, insurance and bonds, and many others.
Each one-page tip sheet includes ASA-recommended language, samples of what a subcontractor may see in a client’s proprietary subcontract, an explanation of the impact of poor language on a subcontractor, negotiating tips and sources for more information.
For example, if a contractor says something like, “This owner is very demanding and doesn’t always know what it wants. I need you to stay flexible.” The subcontractor could respond, “Like you, I’m committed to giving the owner the best job possible. But the documents currently contain many added cost items that we didn’t know about when we bid to you. We can either work out our pricing with you on those items or go back to the earlier requirements.”
The Subcontractors Are Prey Awards, known as the SAP Awards, recognize achievements in the use of predatory contract language in the construction industry. The short description of each tongue-in-cheek award is designed as a humorous tool to help contractors and subcontractors understand and resist such predatory practices.
These tools are ideal for helping increase awareness of subcontract terms and their impact. To learn more visit www.asaonline.com and click on “Join” to select your state.
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