Who pays? 3

[SteelPE]

I had a contractor misplace some anchor bolts in the field. Nobody knew about the missing anchors until steel erection began when we received a frantic phone call from the fabricator asking us to solve the problem. The misplaced bolts completed attachment of a concentric brace to the foundation system so they were pretty significant. It took quite a while to come up with a suitable repair that didn't involve a jackhammer. We solved the problem, went to the site and found the steel erector used a giant hammer to knock a bunch of concrete out of the way and then needed to adjust the detail to accommodate damage done by said hammer.

Now the question, who is responsible for the engineering time spent on coming up with the detail? The GC is willing to pay for the new steel and erection time required but refuses to pay for the engineering time because of "professional courtesy" citing he has never charged a client for an engineering mistake before in the past.

 

[CELinOttawa]

Like Jayrod said, in many cases, however it is also important to note that it is the Owner who is legally required to pay.

The test, as best as my "I am not a lawyer" understands it, is:

- Who ultimately gained/required this work to be done?
Ans: Owner.

This is the reason why so many owners (in particular governments and large corporations) require a labour and material bond from the contractor. If the Owner pays the Contractor, but the Contractor does not pay the subs, the subs may still collect directly from the Owner. In effect the law says the Owner has been defrauded, but that is not the sub's fault, and the sub's work still enriched the Owner, thus the Owner must pay the sub.

Further to this, the Owner has a business decision to make. They have now suffered a tort (ie: Lost money) because of the act or omission of another person. Whether or not they then go and try to collect from the Contractor is not your problem.

It is particularly important that engineers understand this distinction, and that you know your local jurisdiction's lien laws.

 

[jike]

I don't see how the Owner benefits if he has already paid for the original engineering and has to pay again for re-engineering "a fix" because of the contractor's error. It does not make sense.

Normally, we do not have a contract with the contractor but if we are providing services to him to repair his error, then we should get paid by him.

As far as the contractor adding it to the Owner's bill, that depends on his contractual agreement with the Owner.....fixed fee, time and material, etc. The architect or engineer often is hired to review/approve progress payments, so we have an obligation to make sure the contractor does not add it to his bill.

There may be a difference in the laws of the US and Canada.

 

[CELinOttawa]

The Owner is enriched by your work. Without it (they) do not have a structure, though it could be argued that the Owner could have forced the Contractor to rebuild.

I doubt this is any different in the US, other than possibly Louisiana [Civil Code]; It is a fundamental common law test.

 

[CELinOttawa]

You had me curious, Jike, as I've come to appreciate the quality of your posts and depth of knowledge. I'm afraid you're off base on this one; It is the same in the US...

http://answers.uslegal.com/contractors/construction-liens/294/

http://www.bamalawblog.com/2009/07/unpaid_balance_liens_in_mobile_alabama.html

http://www.dleg.state.mi.us/bcsc/forms/conlien/llf-600.pdf

Interestingly, in the US it seems Archtects are included. They are not in Canada, the courts here having decided they don't need this protection as they can just sell their design to someone else.

P.S. I love the name "bamalawblog" and can't stop running it through my head in a cheesy southern US drawl. *smiles*

 

[jike]

The Owner should not have to pay for the contractor's mistake, unless he is on a time and material or cost plus contractual basis.

 

[CELinOttawa]

Your right, and so the law gives them the ability to recover from the Contractor. What is in question is how the service provider (ie: The Engineer) gets paid, not justice.

If the law did not default to the Owner, all sorts of shell-game scams would be possible. As it is, I know of many cases where subcontractors (and Engineers!) only ever got paid by the Owner long after a project completed.

It may not be right, but it is the law. The provider must be paid for their labour for the economy to work. It is up to the Owner to defend themselves from unscrupulous Contractors, not up to us to take a hit because of "professional courtesy" or anything else.

 

[jgailla]

The way it would go in most of the situations I've been in is that the Owner compensates the Engineer for additional work under the existing engineering contract and then backcharges the construction company against the construction contract for the money.

 

[msquared48]

Me too...

Mike McCann, PE, SE (WA)

 

[CELinOttawa]

The "right" way this should happen, in accordance with all the major contracts I know, is:

- Contractor calls for assistance.
- Engineer notifies Owner there is a site issue.
- Engineer provides site instructions / change order directions.
- Where the new works are cheaper to construct than the original (rare, but it happens), the Contractor provides credit for work not completed and bills for the new works.
- Contractor performs work required.
- Engineer bills Owner for work required to support the changes.
- Owner calculates lost value/time (time only if formal terms for same are already in the contract; otherwise this is a point for negotiation) and deducts this amount from their final payment through right to set-off.
- Owners often refuse to release the labour and material bond under these circumstances until all known subs have provided statutory declarations and a period of time has lapsed (often 90 to 150 days).

Somewhere in there the Contractor is usually trying to find extras like mad and the whole thing turns to crap, but these are the "right" steps as I know them.

 

[rharting]

IMO, I wouldn't have done any work until I notified the owner that this was an additional service and they agreed. Your contract is with the owner (I'm assuming), not with the contractor. Therefore, the contractor doesn't pay you directly. As people have noted above, the owner pays you and the contractor pays the owner. Depending on the client, contractor, and the financial status of that project (if there was still budget left), I may have notified the owner that this was an additional service and that I would attempt to stay within the original budget. In most cases, the owner will go to the contractor and have a discussion about why the engineering work needs to be completed and get approval from the contractor that they will pay for engineering services. A delay in construction means time and money. They would most likely have been willing to pay the $2k to keep the project on track for their mistakes.

I had a similar circumstance where A.R. were not installed correctly and the erector couldn't fit the base plate over the A.R. because they were so far out of plumb. I notified the owner (in writing) that it was an additional service and they understood and were willing to pay me for my time. Whether they go back to the contractor (I hope they did) or not I don't much care about.

Remember, it's ALWAYS easier to get the money when you asked for it before the work is completed. Once the issue is resolved, people often forget about the additional work that was required.

 

[RobertHale]

CELinOttawa, In your "right" way doesn't the Contractor calling either you as the Engineer or the Architect set up a new tacit contract? In my experience as SER, my contract is with the owner through the architect, and the contractor's contract is with the owner. Unless it is specifically spelled out in your construction administration agreement otherwise the contractor should always initiate action through the owner because he cannot compel me to provide service, or the owner to pay for service outside the original agreement.

 

[glass99]

How do we draw the line between the construction phase fixes that are included in the base CA fee and those which are not? Assuming you are working with a standard structural engineer's lump sum fee, is the test whether you need to do calculations? The whole point of CA is that we are there to deal with stuff as it comes up. Some engineers do CA entirely on a time billing, which for renovation projects in particular is a very sensible strategy.

 

[SteelPE]

glass

You bring up a point I have been meaning to ask about CA but have yet to get around it. Most of the time I deal with new construction and base my CA on a lump sum fee. I am in the process of being burned by this process by a needy contractor (calls/emails every day with changes they would like to make). I am beginning to wonder if others use lump sum CA or not.

 

[glass99]

SteelPE: I have also been been burned by needy contractors who want every little thing spelled out because they are nervous, or there are a lot of unforeseen conflicts, etc. The problem is frequently not the singular condition were you had to save the day, but the death by a thousand razors where they call you every five seconds. I think the following should be incorporated in lump sum agreements for CA:
- Number of site visits
- Number of iterations of shop drawings
- Number of RFI's
- Number of meetings
- Exclude the redesign and recalculation of members and connections for existing conditions, architectural changes, or coordination with services or other non-structural construction.

 

[SteelPE]

glass

This project I referenced is becoming death by a 1,000 paper cuts. I reviewed the reinforcing 3x because they needed to speed up the ordering process, so they cut the project into three sets of drawings.

I have never included the # of items included in the proposal when it comes to CA (although this has been recommended to me by a few people). I usually don't get worked up about site visits are most of my jobs are 1.5 hours away max.... and I can usually lump the visits together (going to 3-4 sites in a day). I also get worried if the client will be picky if you budgeted 3 meetings and only 2 were needed... but you made 10 site visits vs 6. However, my recent experiences have me reconsidering this stance.

 

[glass99]

Steel: the virtue of counting the number of site visits and shop drawing iterations is that you can actually count them accurately. It can be more difficult to quantify the amount of effort required to deal with a pipe moving by 6". You word your proposal to say that its a maximum of 10 site visits, not a minimum. In my experience no one else is counting my visits, so if I am under no one will ask for money back. When using site visits to claim an extra, you should emphasize that its not just a matter of travel time plus time on site, its the time spent in preparation for the visit, and time spent organizing notes and photos at the completion of the visit. In my experience, high maintenance projects somewhat correlate with number of site visits.

 

[darthsoilsguy2]

permitting & construction phase have almost always been t&m not-to-exceed contracts for our structural and civil jobs.

when i worked in inspections/testing, it was always construction phase and t&m not-to-exceed. in inspections, i would rather work for free than jump through the contractor hoops and aging A/R for $1000 paid out of the GC.

 

[CELinOttawa]

On RobertHale's point: The Contractor *can* call the Owner, but is only legally responsible to give notice in accordance with the contract... That often states that the Contractor shall notify the ENGINEER, it is then our duty to inform the Owner.

Still doesn't change the fact that the Owner must pay us for our labour, and later make the offset or argument/negotiation with the Contractor.

Do not back down on these points people; This is a major source of the erosion of the value of our Profession's work!