Whose fault is it? Who does what during construction.

Look in the mirror and even though you did not build it, you did not draw up the contract or you were not the one that flushed the left over concrete down the toilet it is somewhat your fault. Maybe you wanted to save money so you hired a cheaper contractor who cuts corners. Maybe you thought you could draw up the plans and hire a draftsperson and not an architect but you lose valuable time getting permits. Maybe it all works out but usually it doesn't. 100% of projects will have an issue which will lead to sleepless nights. The question is how many of those nights do you want? It is worth the extra money to pay for experience, proper paperwork and detailed guidelines on who does what.

In the traditional method of development there is the Owner, Architect and Contractor (OAC). Both the Architect and Contractor have contracts with the owner. During the construction process the Architect acts as an owner’s representative. Some Owners may also hire a Construction Manager (CM). The CM is also contracted directly with the owner. On small projects with an experienced Owner a CM may replace the Contractor. More of this in my next blog post.

OWNER (DEVELOPER)

     Photo: Always pointing towards the future. Hopefully they know how to get there?

The visionary and the one with the money. On bigger projects the wealthy Owner will most likely have partners who bring in even more money.

The Owner is required to provide financial proof of funds to build the project if requested by the Contractor. A Contractor may request this at anytime. Usually it happens before signing the Contract or if the Owner misses a payment.

In regards to payments this is how the Owner protects themselves from a negligent Contractor. A licensed contractor will have funds to their name and will provide materials and labor at a mark up cost. They front the money. When the material is purchased, installed or labor provided a Contractor should submit an application for payment. This is where the Architect (when providing CA services) or the CM protects the interest of the owner.

They will review the application for payment and notify the Owner if all items are completed as stated. If they are, great! The Owner pays the Contractor 90% of the payment and puts the remaining 10% in an interest accruing account. The remaining 10% is given to the Contractor when the home is 100% complete after Final Completion. If all the items on the payment are not completed the Owner may pay a smaller amount or request the Contractor to finish those items before the payment is made.

This scenario for payments is not always a possibility. On all big projects this is roughly the way it is done to protect all parties involved. However on smaller residential projects the Contractor may go directly to the Owner and they blindly trust that everything has been completed correctly.

I would also NEVER give a Contractor money up front for materials or labor. Unless there is already an established relationship. If they need money for materials offer to buy it for them. Labor is always paid after the fact. At the beginning of the project this should be made clear on how long it will take to pay a payment after received. I usually request 7-10 days. I believe that is also the law unless agreed to differently by all parties in writing.

If there is one piece of advice in construction get everything in writing and have all parties sign the documents.

Of course there is the option of unlicensed Contractors and day laborers. Money may be saved but the pros and cons will be discussed in another post.

ARCHITECT

       Photo: No, an Architect does not draft by hand anymore. It is now 99% computers. 

The Architect has a contract with the Owner to provide the 5 basic services: Schematic Design (SD), Design Development (DD), Construction Documents (CD), Bidding & Negotiating (BN) and Construction Administration (CA). I gave an overall view on what an Architect does in my blog post titled, I'm a developer ... what good is an Architect?

During construction the Architect will provide CA and act as the Owner's representative. An Architect should provide at least two site visits during construction. At substantial completion to provide a punch list and at final completion. However, depending on the size of the project there may be weekly OAC meetings. When an Architect visits the site they provide observation reports to the Owner. They are NOT inspections. If an Architect provides, “inspections” they may be held liable for construction deficiencies. An Architect also never directs a Contractor or sub-contractor on what to do.After The CD phase the Architect will provide the owner the documents to build the project. These documents are given to the bidding Contractors. Usually the BN is done in concurrence with the plans being submitted to the city for permit review. No need to waste the Owner's time. On bigger projects Owner's will have Contractors provide preliminary bids at certain phases of the Architects SD, DD and CD phases. This is to insure the project is on budget and the bidding Contractors have an understanding of the project. This reduces the BN time.

This may easily be another blog post but essentially an Architect will observe if the construction is following the construction documents. If they are not they will report it to the Owner. For example the roof shingles may be the wrong color or the waterproofing was incorrectly installed. The Owner has the responsibility of accepting or rejecting the work from the Contractor. Most likely the Owner may accept the roof shingles being the wrong color. However, on a project I worked on an Owner accepted the wrong roof color that was approved by the city. Once construction was completed the neighbors complained and the roof had to be removed and replaced with the correct color. Owners should be extremely careful of what is accepted if different from the construction documents. If a waterproofing detail in incorrect the Owner should oblige the Contractor to immediately correct the installation as this may cause damage to the property.

During construction the Architect Keeps an eye on the Contractor to make sure the construction documents are being followed. However, the owner has the final say.

CONTRACTOR

Photo: These construction workers are way too clean.

The Contractor has the job of building a project from the Architects permit set. A good set of plans can make life easy on a Contractor. No matter how good the plans the Contractor will always have questions. However, the more information on the plans the better a Contractor's bid will be and the more likely that a project will stay on budget and time. This is why it is better to pay an Architect a little more for a complete set of construction documents with lots of information. This will cost more than a permit set but worth it if this is the first time an Owner is building this type of project. In one of my next posts we will talk about the difference between a permit and construction set.

The Contractor has a contract directly with the Owner and only takes orders from the Owner. In turn the Contractor has numerous contracts with all their subcontractors. The Contractor is in charge of supervising, coordinating and paying all the subcontractors. The Contractor should provide insurance policies to the Owner from their company as well as those of the subcontractors if the Owner requests these.

Additionally an Owner has the right to know if the Contractor is paying their subcontractors. If they are not it could lead a subcontractor to putting a lien to the property even though the Owner has paid the Contractor.

O.A.C.

Photo: If only every OAC meeting consisted of smiles and good looking young people pointing at a random location on a floor plan for a toilet.

The OAC is a partnership and all parties want to deliver a great final product. No professional will be offended if there is more paperwork required to protect all parties involved. Even though there are emails and it might be in writing take the extra effort and make it a professional document with signatures. If an item needs to be mailed make sure it is with certified mail. 

Better safe than sorry. Plus Lawyers like paper trails.

What did I miss? What did I get wrong? Did I get anything right? It's a blog, there is always more to say. Please comment more minds are better than one.