Blog: Substantial Performance

renovation

Can’t agree?

The renovation of a heritage building started with preparations to demolish some walls to accommodate a new room layout.  Unfortunately, during the preparations the general contractor discovered that the building structure had deteriorated to the point where there would be serious structural problems if  the walls were removed.

This discovery would  result in additional construction costs, and would also delay the project completion date.  The Architect with the consultant team drafted a Proposed Change Order.  The  General Contractor provided a very expensive quote for the  work of the change, and a notice in writing of a delay claim.  The Owner responded that he could not accept any change in the schedule and that the  proposed change order quote  was crazy and  bordered on extortion!

What would you do, if you had a dispute that looked like it could not be resolved?  There are 2 possible strategies that you could use.  Read More…

money

“Liens” – Get paid

So what does a Mechanics lien have to do with construction, aren’t mechanics supposed to only work on cars?  Well if you go back into the original definitions and history books, “mechanic” was originally used to define a person who performed work with their hands, or the modern day equivalent of a “builder” or “trade person”. The mechanics lien was first created in North America by Thomas Jefferson and was a type of “Financial Engineering” that would encourage building, conceived as a form of capital injection for the economy.  A lien would allow a landowner to use his land as security for improvements.  For example, if a landowner hired a builder to construct a barn, the builder knew that he would have security in the land and was more likely to take on the work instead of passing it off as too risky.  [i] Read More…

TIMING IS EVERYTHING

building-construction-building-site-constructing2

“Money makes the world go round” and this is particularly true when it comes to a construction project.  Think of all the different stakeholders involved and the different financial requirements of each:

  1. Employees
  2. Sub Contractors
  3. General Contractor
  4. Owners juggling the financing
  5. Consultants and Project Managers
  6. Banks (covering everyone from Employee mortgages, to General Contractor loans, to Project financing)
  7. Insurance and Bonding agencies
  8. Material and Equipment Suppliers and Manufacturer’s

And the list goes on… so it should come as no surprise that every month the General Contractor will submit a progress claim for work.  Not to put pressure on the Consultant, but once the progress claim is received it should take center stage.  Do you know what the critical milestones are to make sure the “world continues to go round”? Read More…

Bonding or Insurance?

des office

An addition to an existing school valued at around $1M was out to tender.  This was Robert’s first major project after starting his own firm, and as a newly registered architect he was still feeling his way around the world of tendering and contract administration.  This was also the first time he had written specifications by himself.  

Everything was going pretty well with the tender, until Robert received a call from one of the bidders on the morning before the closing.  The bidder asked if  instead of providing a bid bond and the other bonds listed,  could he just include a copy of his Builder’s Risk insurance policy?

It was a pretty good policy, he was paying a lot of money for it, so what was the use of doubling up on the insurance with bonding?  The contractor explained that the Contract Security (Bid bonds, Performance Bonds and Labour & Material bonds) were just different forms of insurance and that he could save the owner a lot of money by not having to provide them.  “Trust me” he said, Insurance was all that was needed!  Robert started to question himself and the spec he had written.  What should he do? Read More…