Construction Management: Nightmares to Avoid

It’s easy to get stuck with a big bill once you’ve signed a contract and have a major nightmare to handle. Here’s a quick story that we hope you don’t forget to remember! We received a call from an excited, and hopeful HVAC contractor just recently who had signed a $350,000 commercial contract with a Charter School to replace seven commercial rooftop HVAC systems. The HVAC contractor was very familiar with residential, in fact, they were residential experts. However, the HVAC contractor had decided to venture off into commercial work, and bided on a contract, and won the bid.

Soon after signing the contract, the HVAC contractor realized, after speaking with his partners, that they may have bitten off more than they could handle, resulting in a call to our team. Once on the telephone, I asked the potential client at this time if they were licensed to do business with the municipality – as a necessity to pull permits for the project they were planning, and if they had their insurances, OSHA licenses, and suppliers in place?

Based on that conversation, the HVAC decided that our team could help navigate the waters, and source out all the suppliers that would be necessary for the project to be completed on time, within budget, and on scope. The first step was to coordinate insurance carriers to get quotes for a $10m general liability policy, required by the property owners before any work could be performed. We coordinated several carriers and scheduled telephone conferences with the partners to discuss the policies and pricing. Our conversations prompted even more questions that had been overlooked by the HVAC contractor, and one of the carriers ran the numbers and suggested that they would lose money just from the purchase of the policy alone.

The second step involved identifying suppliers of the machinery and in this case, it was going to be for the procurement of seven of the ANSIZ21 Central Commercial Rooftop Furnaces. This was the second nightmare: the HVAC contactor in their bid to the school said delivery and install of the ANSIZ21 Central Commercial Rooftop Furnaces would be delivered in twelve weeks – in all actuality, the order once placed would take thirteen weeks just to manufacture the equipment. The next nightmare for the HVAC contractor was the budget. The HVAC contractor had won a $300,000 contract, however, the equipment alone without insurance, trades, building department permits, and signoffs – came in at $356,507.25.

The next nightmare was that the HVAC contractor had not properly secured enough quotes for the project, and did not realize that there were plans and drawings required to be submitted to the building department prior to doing any work on the building. Plans, permits, building registrations were discussed in our initial conversation with the HVAC contractor and was another reason they hired our team to coordinate trades for them. We vetted the Professional Engineer and the Architect, and their quote came in at $32,000, and that did not take into consideration, expediting permits, or fees for inspections. This was another stress tablet for the HVAC contractor – already he and his partners at this point were $25,000 over budget – meaning the money would have to come from their pocket in order to complete the project.

This presented another hassle for the partners because they had to figure out how to perform on a contract that they had under bided on to save face or default on a contract and still have to pay money for defaulting.

If you have any questions or would like to hire a hassle–free professional firm to facilitate this process for you, All Boro On-Call Business + Home Center is always available – Call Now (718) 374-5044