Passing the Buck
Are Contract Glaziers Including Replacement
Labor Costs in the Warranties They Provide?
by Megan Headley
Contract glaziers are used to out-of-the-ordinary requests from architects and general contractors, but there’s one request being made more frequently that’s forcing these subs to take sides.
According to some contract glaziers, architects are increasingly demanding that replacement labor costs be included in the warranty coverage of potential defective products. What’s a contract glazier to do when the product warranty terms offered by the manufacturer do not coincide with the specifications provided by the design engineer to the contractors for bidding?
“It’s something that comes up consistently, and does seem to increasingly be the expectation of the architect and/or general contractor,” says Barbara Kotsos, director of marketing and public relations for Giroux Glass Inc., in Los Angeles. “Our warranty states that if the problem occurs within a year of installation, we’ll make sure that both labor and parts are covered.”
Beyond that? It’s a tough choice: swallow the risk or lose the job. Which would you choose?
It’s not a universal problem. Several of the glazing contractors contacted by USGlass noted that when warranty terms are clear, there’s little room for discussion. But others say it’s a growing problem you could encounter in the future.
It’s a risk that Steve Barger, president of Service Glass Industries Inc., a contract glazier in Frederick, Md., says he’s facing more and more when negotiating contracts with general contractors.
In short, some architects are specifying warranties for glass, and in some cases aluminum curtainwall, that simply aren’t available from the manufacturer. “The biggest area of contention is that the manufacturers do not include labor replacement for their products should they be deemed defective,” Barger says. “The units that we put in these frames are insulating glass units, and the seals on those units are warranted typically to us by the manufacturer for ten years, which is a good warranty. But the architect will specify total replacement as the manufacturer’s warranty and the manufacturer says ‘no, we’ll just drop off new units for you.’”
Every warranty has limitations. But more general contractors are rejecting this particular one.
“When we, the glazier, inform the contractor or owner that the manufacturers will not include these [labor] costs under their warranty, they typically respond that they would then expect the glazier to accept the responsibility themselves for such replacement costs, even if the defect is not a result of the glazing firm’s installation practice. This is a cost that could be very large and I imagine put some, if not many, firms out of business should there be a large issue,” Barger says.
The actual manufacturers’ warranties often don’t offer much guidance.
“Many manufacturers’ warranties— which we pass through to the owner— are either silent on the replacement labor or specifically exclude the replacement labor. For instance, the glass manufacturer may have a 10-year warranty on the insulating glass, but that warranty may say they will replace the glass ‘free on board’ the nearest shipping point to the place of installation,” says Jane Hilboldt, CEO of Hilboldt Curtainwall Inc., in St. Louis.
Standard or not, members of the development and design community seem set on changing this.
“What troubles me is the growing trend to include a long-term special project warranty or a special assembly warranty in section 08 44 13—Glazed Aluminum Curtainwall. We have encountered this several times during the past year,” Hilboldt says.
A special project warranty might include a contract addendum with language such as the following from a 2009 contract addendum for glazing, among other work, on Kent State University:
“The undersigned hereby warrants the glazed aluminum curtainwall system against leaks or faulty workmanship for a period of five years after the date of substantial completion for labor and material.
“Warranty shall cover, at no additional cost to the owner, all labor and materials required to repair and replace the glazed aluminum curtainwall system.
“All costs for the above should be absorbed by the materials manufacturer.”
The problem occurs when those leaks aren’t caused by faulty workmanship. While few manufacturers agree to this language, glazing contractors are under pressure to do so.
“We have seen similar requests on some projects, but most material suppliers are not going to extend their warranties to include work that is beyond the scope of what they provided on the project,” says John Campbell, president of Winco Window Co., in St. Louis. “Most contractors that could supply this turnkey warranty are reluctant to do so because they do not carry the warranty for the material in question, which is passed through from the original provider.”
Fight or Flight?
Not every glazing contractor is encountering this requirement. But that could change as more accept the risk of covering costs for fixing a problem they didn’t create. Some contract glaziers say accepting the risk and agreeing to foot the bill for replacement of a defective product seems to be the norm. It helps keep them in good standing with architects and general contractors who bring in big repeat business. It can also avoid drawn-out legal battles to prove that a problem as complex as leakage was the result of manufacturing rather than installation.
From Barger’s perspective, the subcontractors who accept these terms are encouraging the practice.
“I wish we, as subcontractors, had the unity that the manufacturers have,” he says. “No matter what manufacturer I go to, I can’t buy the warranty that the architect has specified. Well, if I put money in my bid to cover replacing 2,000 units, I’m not going to be competitive in my bid, and I’ll never get any work.”
If a contractor wants the work bad enough, Barger points out, signing this risky contract addendum might seem a gamble worth taking. “You’re intimidated when you need work to keep your crews busy and your business going. You’re pushed into a corner where you might take on more risk than you think you should, because you shouldn’t have to take risk on anything you don’t control,” he says.
Accepting the risk isn’t the only option. Understanding the risk, and the industry’s position, and using that information to educate your customer is another possibility.
“On a recent project, the specifications called for a 10-year special assembly warranty covering both materials and workmanship,” Hilboldt says. “The specifications also called for performance and payment bonds. We argued, successfully, that this is a specification issue because it is a request for something that is not available in the industry. In the research I did, a typical curtainwall subcontract warranty is for one to three years’ workmanship, and all other warranties (material warranties) are provided on a pass-through basis without warranty enhancements. Performance bonds automatically cover a one-year defective workmanship guarantee. Most sureties will extend the warranty period to two years and will charge a maintenance fee for the second year, but will not provide a bond for an extended warranty.”
Any solution to this problem will carry risk, but there may be other courses of action.
Scott Harris, a partner with Whitfield Bryson & Mason LLP in Raleigh, N.C., sees this inclusion of labor costs in product defect warranties more commonly in residential warranties. He notes that it’s not uncommon in those instances for labor costs to be prorated down after a set number of years. Glazing workmanship warranties normally cover one year, but if the architect is looking for extended coverage, a pro-rated agreement might work as a compromise.
A maintenance bond, guaranteeing labor costs beyond the workmanship warranty, is another potential alternative.
“Maintenance bonds aren’t as common as other contract bond types simply because they’re not written into contracts as often as one might think,” says Danielle Rodabaugh, chief operations officer for SuretyBonds.com. This makes maintenance bonds an easily overlooked option. “The contractor would apply for a maintenance bond from a surety company at the same time he or she applies for the more commonly requested performance/payment bond.”
Rodabaugh explains, “Surety bonds work more like lines of credit than traditional insurance policies. If a claim is made on the bond due to faulty workmanship, for example, the surety company would require the contractor/contracting company to repay it for any claims paid out. The higher the bond amount, the more liability the contractor takes on.”
The challenge is that not every glazing contractor, or project, will qualify for this bonding.
“Any contractor can apply for a contract bond program, but due to the risk involved in construction projects, surety companies typically have strict qualifications that applicants must meet before being approved. The program limit any given contractor can qualify for depends on a myriad of factors such as professional experience and revenue flow,” Rodabaugh says.
Then there’s the hope-and-pray approach. Some lucky contractors have taken the risk only to be rescued by the manufacturer at fault.
“With a lot of manufacturers, if you make a fuss, they may go ahead and cover the labor as well,” Harris says. “I’ve reviewed a lot of warranty claims for manufacturers, and usually the people who yell and scream get a better option from the manufacturer with regard to labor.”
In an industry where manufacturers are few and reputation is everything, it turns out this solution does work.
“Our experience has been that the large, established glass manufacturers step up to the plate when a problem arises, by both replacing the glass and paying for the labor to remove and replace the defective units,” Hilboldt says.
Barger adds, “I had a coated job recently where much of [it] was installed, only to determine that the coating was defective. The manufacturer’s warranty stated that should we have defective coatings we’ll replace all this glass but no labor, and I was really sweating this. Well, that particular manufacturer, though their warranty made certain statements otherwise, did not hold us to that and compensated us a reasonable amount to take all of those units out of the building and put all new ones in.
“It was no easy task,” Barger recalls. “We took probably 1,000 lites of glass out, took them to the dumpster, took 1,000 lites up by elevator and re-glazed them. Had [the manufacturer] not been willing to cover our costs for that, it would have had a dramatic effect on us, let’s say, for something we had nothing to do with.”
Every project carries some degree of risk. As Thomas Jefferson once said, “With great risk comes great reward.” But is there such a thing as too much risk?
“For the glazing firm to have to accept such large risk for something it has absolutely no control over doesn’t seem proper, nor does it seem reasonable to place the glazing firm in the position of having to choose no job or a job that has even more risk than is normal,” Barger says.
Because it’s an emerging practice, there’s no set solution to turn to just yet.
“This is a conundrum, and one that is not easily resolved. What is clear is that the building owner will pay a higher price for his product if he is also going to insist on turnkey warranties,” Campbell says.
Maybe. But maybe not if more glazing contractors don’t say no to this request.
Megan Headley is special projects editor for USGlass magazine.
She can be reached at email@example.com.
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