Broad Descriptions of Scope of Work Can Create Conflicts and Misunderstandings
There are many terms in a subcontract that can become the source of disputes. The two parties may wrangle over scheduling, change orders, timing of payments, backcharges, or other issues. However, there is one element of the subcontract that will almost certainly produce disputes, if it is not addressed before the subcontract is signed. That term is the scope of the work to be performed.
When a subcontractor receives a bid package on a proposed project, the scope of the work involved will be generally described. The subcontractor should be able to review the plans and specifications applicable to its work, as well as any bulletins or addenda further defining the job. The subcontractor may also receive a proposed form of subcontract that will describe the scope of the subcontract work by reference to the plans, specifications, and drawings.
The subcontract may contain general language describing the work like: "All items of the Work identified in the bid package dated _________, including all Work normally undertaken by those in the trade for this type of Project."
It may state: "All Work to be performed by the Subcontractor, including but not limited to, those items in pages __________ of the Drawings, Section ________ of the Specifications, and such other items in the bid materials as are applicable to Subcontractor."
Who is Responsible?
Such broad and unspecific descriptions of the work may be later interpreted by the general contractor to expand the scope beyond what the subcontractor originally understood to be the case.
For example, under the type of language in those examples, which party would be responsible for HVAC controls shown on the plans and specification, but not specifically identified as the responsibility of the SMACNA Contractor? Which party is responsible for louvers in the duct work? Who will handle fire dampers, smoke dampers, and smoke detectors? Which party is responsible for fire sealing of wall penetrations to meet building code?
If the subcontractor does not get clarification as to such items, the general contractor’s response when the issue arises may very well be: "It’s part of your job, it’s the type of work normally done by the sheet metal subcontractor, and you will either do it or not get paid." If the issue arises in mid-project, the subcontractor will already have a substantial investment in the project and its leverage to get payment for an “extra” for the disputed work will be minimal. The subcontractor’s profit margin on a project can quickly disappear in such a situation.
How does the SMACNA Contractor protect himself or herself against risks related to a poorly defined scope of work? Certainly, the subcontractor will want to verify how the language of the subcontract defines the scope. Paragraph 4.2 of the relatively new AGC/ASA/ASC Standard Form Construction Subcontract (1994) contains the following compromise language on scope:
"4.2 The scope of the Subcontract Work shall consist of all work necessary or incidental to complete the: (sheet metal) work for the Project in accordance with and reasonably inferable from the Subcontract Documents as being necessary to produce the intended results and as more particularly, though not exclusively, specified in:
(list the pertinent bid documents)
with the following additions or deletions:"
(list alternates or exclusions)
This subcontract form gives the subcontractor the opportunity to identify exclusions and extras, but it will still lend itself to a broad interpretation, if the subcontractor does not carefully evaluate and clarify the scope. It is particularly essential that the subcontract identify exclusions in setting its bid price or identify the unclear items as alternates, with specific pricing for each item of additional work.
The use of a scope notice in filing bids can also protect the subcontractor. One example is the AGC/ASA/ASC Joint Standard Form 1: Standard Subbid Proposal. Another example is the Suggested Air Handling Bid Scope (Spectext Index) from the SMACNA Air Handling Specification Reference Manual.*
Using this type of notice should "flush out" most misunderstandings with the construction manager, general contractor, or prime contractor about what your bid will include. It will also provide valuable evidence to you in any later claim for payment on extras that were not included in the description of subcontract work under the scope notice.
A subcontractor who pays careful attention to the scope of his or her work is performing a service for the owner, construction manager, or general contractor by calling their attention to parts of the project that might otherwise "fall between the cracks." More importantly, the subcontractor is protecting its own financial position and reducing the potential for disputes as the project progresses.
* Both of these forms are contained in the Appendix of the SMACNA Contractor’s Guide For Modifications To Construction Contracts.