Please Tell Me What You Think

PipeGuy

I'm negotiating an agreement to complete the work of a terminated subcontract. The subcontract was terminated by the contractor I am negotiating with. While I am not intimately familiar with the specific proceedings, the contractor has represented to me that he 'kicked the sub off' the job for reasons of non-performance and because they had reached an impasse over the subcontractor's inability to properly assert a 'changed condition' claim (the sub wanted a huge extra but wouldn't / couldn't document the basis for the extra to the contractor's satisfaction). The contractor is under contract with local governnment and has provided various surety instruments to the govt. as a condition of his contract. From what I can tell the sub was paid about 50% of the subcontract amount and has performed about 25% of the work (no wonder contractors get bad reps, huh?). Oh, and besides being very technically challenging the job is an extremely environmentally sensitive one - lots of eyes on this one.
My questions to you are: 1.) Would you even consider taking over such a mess? 2.) If so, what contractual / liability issues would you be concerned about as you look at the potential for doing this job?
Any comments will be greatly appreciated. I'm down to the 11th hour of deliberations and will have to move forward soon.

hatchet

1) If the job fits your specialty - sure. Like you said eyes are on it and if you can perform to satisfaction you'll be far ahead.
2) First and foremost would be bringing up any dificiencies in work already performed. I would insist that you have the right to fix them and bring them up to your standards as your name will be associated with the "whole" final product. I probably wouldn't take the job if they won't allow that - it'll do more harm than good. I would put that in the contract as a T&M price. Most likely the same surety/bond requirements will trickle down to you - so you'll need to account for any additional costs there. Otherwise - just use the experience you've already got to make the call - it's not an easy one.

__________________
Rich
WIT Construction Co.
Superior MT Contractor

pondman

Unless the contractor is a REAL TRUE friend I would not stick my right toe into this project. To much hanging out there that could become a legal problem mid-way into job. When someone has to come into a job midway in stream it is to fix a problem. This equates to more Money. So there goes profit margin for the contractor. This, you know already. If the VARIABLES + RISK = MONEY formula works for your company I say go ahead. But with the work that is out there, this headache would be too much without enough money to make it worthwile for the risk that may be waiting around the corner.

PipeGuy

My thought too - and how much is enough if you're at considerable risk of delayed / contested payment? I can't take that kind of hit to my working capital at this point.

Craig

Pipe
There are a number of considerations in this scenario. GC's to a municipality generally receive progress payments as work progresses with a substantial retainage paid upon completion of the contract. Subs are usually paid out of the progress payments. If the fired sub has received 50% of the payment due for 25% of the work, there may not be sufficient moneys due from future progress payments to cover the remaining work. Also, the changed condition claim is a concern. If there is a substantial change in the scope of work to have been done by the sub, it probably means a signifcant change in the scope of work under the prime contract to the municipality. That would usually result in a change order under the prime contract requiring municipal approval, etc. Also, if the project is "evironmentally sensitive", what, if any, issues are there with respect to state and/or federal environmental regulations? Any of theses issues could result in serious delays in payment. I'd pass unless this is a GC whose future business is worth the risk.

__________________
"Send lawyers, guns and money."
Craig

voltamp

Gentlemen:

It is the responsibility of the General Contractor to fullfill their complete obligations to the contract. It appears from your description that they over paid and is left with paying additional monies to complete.

You don't want to be the one that is left holding the losses. This now becomes a subcontract not to exceed a fixed cost. You work it as a fixed or time and material subcontact with demand payments. Get information on the general contractor's bonding company immediately and notify them when payment is over due and copy the government contracting officer.

Any unknown situation needs a sign change order or work ticket, and you need to know that the person signing the work ticket is authorize to do so.

This is a money maker, but only if you are able to document everything, and prepare it as a claim. It is a no win situation if you are a loose contractor.

Glasshousebltr

PIPE! for crying out loud, you better than going near an open flame when covered in gas.

Bob

PipeGuy

What's the old saying? Straight to hell in gasoline shorts?
What can I say, I like jobs that pose very unique challenges. This one's got them from pre-bid right through final payment. First, the proposal process has gone through multiple evolutions. The GC wanted a 'unit price' basis (per foot of pipe, per each manhole, per CY of rock,etc.) proposal and I told him no - fixed price basis was what I'd do. After preparing / presenting a very detailed proposal (6 pages, single spaced, with detailed cost estimates for window dresssing) he told me I was $twice what he had left to do the job. So then I went the T&M route and managed to craft a scenario that better fit both our needs. Thursday and Friday I spent nit picking and tweaking the proposed Subcontract Agreement so I don't get buried by the previous Sub's deficiencies.
Sewer work can get kinda' repetitive and I enjoy something like this every once in a while to keep you on your toes. This job will be kinda' like dating the neighborhood witch - one way or another it'll probably be something I won't soon forget (if I don't come out of it a toad) I'm close to working this one out but it won't happen unless it happens 'my way'. Voltamp touched on most of my sentiments in his post. I'll let you know what happens.

Teetorbilt

Pipe, just out of curiosity, is this sanitary sewer or storm drains?

PipeGuy

sanitary - 6 MGD 'relief' sewer

Grumpy

I would make sure there there is a clause that clearly adn legally spells out that you are not warrantying or guaranteeing the previous subcontractors work under any condition. This would be regardless of any dificiencies. You wouldn't want to be liable if you missed one or two dificiencies and they tried to force you to fix them for free a year down the road.

I've done a few jobs in the past where I was fixing other peoples mistakes but never on a government type job. Boy government jobs are head ache enough, this would be a nightmare.

PipeGuy

Grumpy - Just some light reading I know how much you like this kind of verbage

• Article 9.1
o Add: CONTRACTOR shall indemnify, hold harmless and defend Subcontractor from and against all claims, damages and losses that exist or otherwise arise from, either directly or indirectly, any acts or omissions resultant from the execution and subsequent termination of the Original Subcontract Agreement dated ______________ by and between ______________________ and _____________________.


o Add: CONTRACTOR shall indemnify, hold harmless and defend Subcontractor from and against all claims, damages and losses that exist or otherwise arise from any defects in the materials that the CONTRACTOR provides for the Subcontractor’s incorporation into the work without regard to the nature, origin or cause of defect.

o Add: CONTRACTOR shall indemnify, hold harmless and defend Subcontractor from and against all claims, damages and losses that exist or otherwise arise from, either directly or indirectly through acts or omissions, deficiencies in the integrity of the work performed under the terms of the Original Subcontract Agreement whether or not such deficiencies are a result, either in whole or in part, of the acts or omissions of Subcontractor. This indemnity shall extend to all aspects of the work performed and materials provided under the Original Subcontract Agreement.
• Article 14 – Add: This Agreement does not assign liability to the Subcontractor towards correction of defects in the existing work including all defects that are buried, submerged or otherwise concealed as of the date of this Agreement.

Glasshousebltr

Light reading allright, but is it a third less calories or does it just taste great.

Bob

Teetorbilt

It's gravity and vented?

PipeGuy

By relief I mean 'overflow capacity'. I'm not sure what you mean by 'vented'. Part of the problem is that the existing sewer 'vents itself' out the top of manholes during storm events. Seems that it has some infiltration and inflow issues that need adressing.

Teetorbilt

I was a utilites engineer for a few years but it was in FL. Here the laterals flow to gravity mains to wetwell pumping stations to force mains. Surface venting of sanitary sewers is verboten.

PipeGuy

Yeah, I kinda' figured as much. Not a whole lot'a force mains here on the Piedmont / Atlantic Coastal plain line - plenty of hills and drainage divides. Most of the ones you do see are the relatively short run 'pump over' variety - justt enough to get it over the next hill. The closer you get to the ACP the more you see jurisdictions using watertight manholes as a rule. Some of the older towns still have combination storm/sanitary sewers. I was in an old underground brick arch a couple of years ago that was 'tidal' and still took untreated stuff straight to the river (federally generated stuff on top of that) What a mess!

Teetorbilt

When I was a kid we must have had a few open ones.
Many decades ago, a few junior high school kids bought some 3/32 'cannon fuse' from the back of a comic book. Not knowing what to do with it they tried many things including threading some of it down the gaps in a manhole cover. Fortunately they were smart enough to be a few feet away when the thing blew. The cover was at least 40 ft. in the air when we all started running, I have no idea how much further it went up. Oddly enough, it landed directly over the hole and rightside up. Just like nothing had happened. Bippy's Dad was a little tweaked but later people noticed a reduction in the amount of cockroaches. True story!

PipeGuy

Hard to believe we survived childhood without a bike helmet and car seat - ain't it?

Teetorbilt

What them things is?
There are times that I feel blessed for having bicycles, skateboards and other things. There are other times,later in life, that I wonder if these things were just a contrivance to get rid of me.
Lord knows that all of them contributed to near death experiences and I only survived due to my personal constution not to die and continue to make my parents miserable.