Request for Proposal (RFP)

ECHO Journal: Ask the Expert January 27, 2012

“What is a “request for proposal”? The association I belong to needs to have some roofing and siding work done, and I’ve been told that the best way to get contractors to bid the job is to provide them with a proposal request. What type of information needs to be in the document?

A “request for proposal” (commonly referred to as RFP) is a document drafted by a building owner or association that formally requests bid solicitation for material, services, construction, or repair of a building, system, or component. Commonly used when soliciting bids on larger projects, RFPs are increasingly being used by associations on smaller jobs as a tool to clarify and detail the work being desired. An RFP usually contains specific information about the services being requested, and the information necessary for a bid proposal to be considered by the association. Along with a scope of work, a RFP can ensure that contractors bidding on the job are bidding to perform the work in the same manner with the same material.

Repairs to buildings and components of a Common Interest Development are often very specific and must be done on a periodic basis with minimal impact on the residents. Although repairs to a complex may be major (siding or roof replacement) or minor (replacing light fixtures, signage), specifying the needs of the association with how the work is done and what is expected of the contractor will always lead to a better overall project.

Associations are charged with the responsibility to maintain and repair the complex and ensure that the repairs to a complex are performed by qualified contractors and properly done in an efficient manner. Creating an RFP can be a valuable tool when requesting any repairs or reconstruction. A RFP can be a simple one page document or it can be more detailed depending upon the size of the work being requested and the needs of the association. It can be drafted by the association, a construction consultant, or a project manager.

As a basic template, a RFP should have two main parts. The first part would contain a summary of the work to be performed, the general expectations of the association during the course of the project, an estimated time frame for the work to be done, a scope of work listing methods of installation and materials to be used, and any special requirements the association may have with regards to access to the units, where material may be stored, and parking of company vehicles.

The second part of the RFP should detail the submission requirements for contractors presenting proposals. Determine what information you will need from each bidding contractor to ensure that the firm is qualified and capable to do the work. Ask the contractor to describe how the work will be performed and how the contractor will address any special issues associated with the job. This section should also require contractors to state they are properly licensed and equipped to perform the work, the contact information of the company and foreman on the job, certificates of insurance for general liability, professional liability, and workers compensation.

The RFP should clearly state the date proposals are to be submitted, and the date a decision will be made to award the contract. Be sure to request a list of at least three previous jobs that closely reflect the work being anticipated Prior to selecting a bid proposal, someone from the association must inspect the properties listed as a reference to determine if the quality of the work performed meets with their satisfaction.
Sending out an RFP will inevitably trigger phone calls and questions from bidding contractors and requests for site visits to review the project. Associations should appoint one individual to handle all of the information requests and site visits to ensure each contractor sees and receives the same information. This person could be a committee member, a construction consultant, or project manager, and should be familiar with the project and the association’s needs.

It is important to remember that bidding a job takes time and manpower that a contractor normally does not charge for. Reputable contractors will not bid jobs that are poorly defined, and they are hesitant to work with associations that do not appear to be organized, do not have a single point of contact, or cannot make timely decisions. Even in these tough economic times, good contractors will be selective in who they will work for, and under what conditions. If a request for bids is not clearly stated, it will be harder for an association to determine if the bidding contractors are truly qualified and whether they are actually bidding on the same work

As a final note, when you do ask contractors to submit proposals for work, it is professional courtesy to notify each of the firms submitting proposals the outcome of the bid review. Whether a contractor is awarded a proposal or not, they have invested a lot of time in preparing the bid and they deserve to be told what the board decided. A proper notice should include the statement that the association has chosen not to accept the contractor’s proposal, and that they appreciated the time and effort the contractor spent in preparing their bid. This can be done via a letter, an email, or a simple phone call.

John R Schneider is a licensed General Building Contractor, and certified Code Specialist. Since 1985, he has been president of All About Homes, Inc., an East Bay consulting company that specializes in the investigation of construction related deficiencies, the management of projects, and the facilitation of disputes between owners, associations, and vendors. Mr. Schneider is a member of the ECHO Maintenance Panel. Questions or comments can be directed to Mr. Schneider at jrschneider@allabouthomes.com.

Understanding Construction Terms

Scope of Work:  Every job or task has a number of processes through which it must go to reach completion.  A scope of work defines each step necessary to complete the job in a safe, compliant, and successful manner.  A scope of work is usually created in conjunction with plans and specifications..  It is the baseline document along with the terms of the contract that establishes the parameters of a job and how the work is to be performed.  A thorough scope of work will result in competitive and comparative bid proposals.

Contractor and Sub-Contractor Procurement/Bidding:  When a project is designed and a scope of work is defined, costs to perform the work must be obtained.  This is referred to a “putting a job out to bid”, and is usually done through a formal Request for Proposal (RFP).   The RFP would outline and define the general nature of the work to be performed, the license and insurance requirements of the bidding contractors, and include the scope of work.  Without an RFP and a detailed scope of work, contractors bidding a job will not necessarily be qualified and will not be bidding on the same items or amount of work.  This is the main reason bid proposals result widely varying costs.

Project Scheduling:  Once a scope of work has been established,  a schedule must be created to reflect the time it takes to complete each task to complete the project, and how each task will integrate into the flow of the job.  The project scheduling is usually devised by the contractor awarded the contract.  It will detail the start of the job, each phase of work, material delivery, inspections, and a date for completion.

Phased Construction Inspections:  Once work is started, it is advisable to have someone, preferably a third party, perform inspections at the different phases of construction to verify that work is being performed according the plans and specifications.  This becomes more important when various trades are involved, and can be valuable when determining whether a progress payment should be made.

Phased Contractor Payments:  One of the most important tenets of construction is to only pay for materials or services delivered.  Often times, contractors receive more payments than services delivered and this is when problems occur.   A payment schedule should be prepared that clearly defines when a contractor should receive a payment, and how much the payment will be.  Payments should be associated with “phases’ of the project.  For example, on a small addition, payments could be scheduled once demolition and site preparation have been completed, once the foundation is poured, once the addition has been framed, and once it has been finished.  It is always wise to withhold 10% from the final payment until a final walkthrough of the project is performed to verify it’s completion.

Permit and City Management:  Almost all work performed in the demolition, construction, or modification of a structure requires permits and approvals from the local municipality.  This requirement can be found in the state building code and local ordinances.  The reasoning is simple; there must be a means to ensure work is performed in a safe and workmanlike manner.  All licensed contractors are required to obtain permits and approvals for work requiring permits.  There are few exceptions to the need to get permits, with painting and cosmetic work being excepted.  Always consult with the local building department to verify if permits are needed when performing any type of repairs or construction.

Owner Punch List:  Owners are best served by inspecting each aspect of work, or by hiring an independent construction specialist to evaluate that the work has been done according to the plans and specifications, and in a workmanlike manner.  This should be done at each phase of work and prior to making a progress or final payment.  It’s common to find items which need to be addressed, and these items are compiled into a (punch) list.  This list is then given to the builder/contractor to fix.  Once the punch list is completed, and verified, final payment can be made.

 Final Payment Inspections:  The final payment represents not only the completion of the job and the work performed, it represents the owner’s acceptance of the work.  Once final payment is made, it can be difficult to get the contractor back to complete unfinished items or work not reflecting acceptable standards of workmanship.  At least 10% of the final payment should be withheld until it can ascertained the work is truly complete.   It is always advisable to have an independent construction professional or the designer/engineer associated with the project review the work and verify it complies with the plans, specifications, and contractual requirements.

Construction Workmanship Concerns Q&A

QUESTION

“We just bought a new house and we’re having trouble with the builder correcting several things that are wrong. There are problems with the exterior paint coverage, scratches on the cabinet and tile installations and the finish on all the woodwork and doors appear to be sub standard. We have contacted the builder several times and their response is that there is nothing wrong. What are the requirements for workmanship to be acceptable.” –  T. & C., Alamo

 

ANSWER

You have touched on a subject that many new home buyers are asking, “What constitutes an acceptable level of workmanship?” While there is no one place that you could find all of this information, most of it is available and is usually based on common sense.

Every aspect of construction has specific standards and requirements that dictate what an acceptable level of workmanship is. It can be found in the texts for union and trade schools, as well as the standards specified by manufacturers, designers and architects.

There is even specific language in the various building codes that dictate what steps are necessary for work to be considered acceptable.

For example, acceptable workmanship for painting a door would be to have the door sanded and primed, and then painted with a finish coat of paint providing a smooth, uniform surface with no voids or brush marks.

Does this mean that if there if one little brush-mark or slight unevenness to the paint in a particular location, the whole door needs to be repainted? No. If the imperfection is not obvious, and does not affect the inherent characteristics of the object, it is usually considered acceptable. The general rule of thumb for deviations to a finished surface is if the defect is visible within six feet, under natural light, it usually does not reflect industry standards.

Complaints for workmanship are on the rise and it is partly because of the hot construction market. In a market where houses are going up thousands of dollars each month, there is a willingness of some builders and contractors to sacrifice quality for cost and speed of installation. Workmanship issues can also be the result of poor jobsite supervision by a builder as well as a lack of in-depth trade knowledge and skills of the workers. As a consequence consumers are having to accept less than standard levels of workmanship.

A few weeks ago I was asked to inspect a newly built home two months after the buyers moved in. They began noticing problems with the finished condition of the house. While most of the complaints were cosmetic in nature, the buyers did have some legitimate concerns.

The biggest problem had to do with the finish painting and the installation of the cabinets in the kitchen. The finish painting had voids in its coverage and some walls were uneven in color. The enamel finish on the wood trim and doors had some obvious brush marks and paint runs. The cabinet installation had missing pieces of trim, the seams and joints that were not tight, and several of the cabinet doors did not match in color, or pattern of wood grain.

The builder’s initial response was that the quality of workmanship in this home was consistent with the standards of production housing and that the buyers were being too “picky”. He also stated that most of these items were not mentioned on the final walk-through, which meant that the buyers accepted it.

After inspecting the property, I agreed with the buyers that the workmanship was not acceptable and that it did not reflect standards of the industry for the reasons that I have mentioned above. We then arranged to meet with the builder at the property. It wasn’t until each item was pointed out and discussed, that the builder was willing to correct these conditions.

Most contractors and builders want to take care of any legitimate complaints that the consumer might have. Yet sometimes they are asked to correct things that really don’t need correcting or that are unreasonable. This is when most of them draw the line on what they will do for a customer.

It sounds like you have some legitimate complaints that need to be resolved with your builder. You might want to call in a couple of painters and tile contractors to get their opinions on the workmanship in question. You will need to establish that, indeed, the workmanship does not reflect acceptable levels.

Ask the builder in writing to meet with you at the property and discuss each item in question and determine how each one can be resolved. More than likely he will be willing to cooperate if your complaints are reasonable.

Home Improvement Contracts

I am going to discuss specific details that every home owner should see when entering into a home improvement contract with a contractor. The contract you use when working with a contractor is the most important key of having a successful job. It should clearly outline what will be done, how will it be done, what materials will be used to do the work, and how much will it cost.

In order for the contract to protect the two parties involved, it must contain certain items and disclosures made by the contractor to the homeowner. There are several laws that govern how a contract is to be written and they are contained in the California Business and Professions Code as well as the California State Contractor’s License Board.

Before any contract can be entered into, the contractor must give the “Notice to Owner” disclosure form to the homeowner. This form clearly explains the contractor’s lien rights (as well as the rights of material suppliers and subcontractors), and offers four suggestions to the home owner as to measures that can be taken to ensure that the job gets finished and liens are not filed.

The second notice a contractor must provide to the homeowner is the fact that all contractors must be licensed, and if you contract with someone that does not have a license, the State License Board may not be able to assist you if there is a problem. It then asks that you check the contractor’s license number and gives the address for the CSLB to contact if they wish to file a complaint. Once the home wner receives these forms, a contractor can legally enter into a contract with them.

State law requires a contractor to use a contract if the total cost of the job exceeds $500.00 (including materials, services and labor). The contract must also contain the contractor’s name, address and license number. If he or she offers any specific warranties, they must be clearly stated in the contract, and there should also be language describing the type of dispute resolution the contractor wishes to employ.

In general, all home improvements contracts must include, the approximate date the job is to begin, the approximate date the job will be completed, a description of what work is to be done, a description of what constitutes a substantial completion of work, and a notice to the home owner that states if the contractor does not start work within 20 days of the date in the contract, he or she will be in violation of Business and Professions Code Section 7159.

The most common mistake most homeowners when entering into a home repair contract is not clearly defining what the scope of work is and how the work will be done.

For example, instead of describing the job as “refinish living room floor”, it should be stated as “ Sand down existing finish to bare wood, replace any stained or split pieces, putty and fill all nail holes and open joints and finish sand. Apply two coats of XYZ Satin Floor Finish, and stain new base to match.” It is best to give as much detail as possible so that your picture of the job is what the contractor actually does. Take the time to state the manufacturer of the product, and how the products are to be installed.

Part of the contract should also include plans and specifications as well as details on how debris will be removed, how the job will be kept clean, and any special requests like “furniture and floors to be kept covered at all times” or “home owner will install all finished light fixtures”.

Once the description the work is established, the price can be agreed upon and a schedule of payments can be written into the contract. At no time should the payment to the contractor exceed the amount of services performed or material supplied. By law, the contract must be completed for the agreed upon contract price.

Contractors can charge a down payment for their work, however, the down payment cannot be more than $1,000.00, or 10% of the contract price, whichever is less. There are no exceptions for special ordered materials. (With swimming pool contracts, the limits are $200.00 down or 2% of the contract, whichever is less.)

For those of you who would like more information about hiring contractors and writing home improvement contracts, the California State Contractor’s License Board has an excellent publication called “Home Improvement Contracts: Putting the pieces together”. This booklet contains a copy of the notices a contractor needs to give to home owners and has a list of other resources. It is free and can be obtained by calling 1 (800) 321-2752, or you can reach the CSLB at their web site, http://www.cslb.ca.gov/.