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.

Experience: Balcony Leakage

Leakage at balcony deck railing from roof flashing leak. AAH performed water testing to identify source of the leakage.

Experience: Condo Roof Leak

AAH was retained to evaluate roof leakage and provide litigation support regarding defective construction, and management services for the eventual repairs of the defects.

SB 800, Part 2, Legal Limitations

When Senate Bill 800 was passed, the intent was to create a bill that would benefit both builders and consumers. The bill was designed to control to the soaring costs and occurrence of litigation involving construction defects. This bill affects newly constructed homes, town homes, and condos sold after the first of January 2003. One of the most controversial parts of the bill that will have the greatest affect on new home buyers is the fact that the bill establishes new statutes of limitations within which a claim for a construction defect must be made.

The new statutes of limitations contained in this bill are not all inclusive in terms of what they cover. Rather, they have been designed to apply to only specific components, under certain conditions, and for only stated periods of time. While these new statutes of limitations will be offering relief to builders, manufacturers and insurance companies, they are going to impact a homeowner’s ability to seek relief from construction related claims, as well as limit their ability to discover defects. Let me explain.

SB 800 requires several different specific periods of warranty coverage to protect the interest of the new homebuyer. The most basic coverage builders must offer is a minimum one year express warranty covering the “fit and finish” of certain building components. This is similar to the one-year warranty builders are offering now, yet it is limited to only the cosmetic and finish items in the house.

There are strict time limitations contained in the bill which require builders to be responsible for certain construction defects for up to a ten-year period. Although the ten-year time frame is similar to the previous California statute of limitation for latent (hidden) defects, SB 800 specifically lists categories of items that would be covered. These categories include the most litigated issues involving new construction; water penetration through the exterior of the building (siding, roof, windows and doors), structural issues (foundations, framing), soil issues (movement, settlement, drainage), and fire protection issues.

With regards to water penetration the bill expressly states that water shall not pass beyond, through or around any windows, doors, roof, decks, balconies, flashings, or trim of the building. Foundations, slabs, patios, walks, and drainage systems, installed as part of the original construction shall not allow water, vapor, or soil erosion to enter or come in contact with the building so as to cause damage to another building component.

The provisions governing structural and fire protection issues state that all structural components and foundations are required to be constructed according to the wind, fire, and seismic design criteria set forth in the code adopted at the time of construction, and shall not cause the structure to be unsafe. The requirements for soil basically state that soil shall not cause the ground upon which the structure is built, to become unusable for its intended purpose, and shall not allow damage to be caused to other portions of the house.

While these provisions of SB 800 provide much protection for the consumer, the particular provisions for the plumbing, mechanical, and electrical systems, there are substantial limitations on the provisions for walks and patios, landscaping and drainage systems, and manufactured products (windows, doors, fireplaces, plumbing and electrical fixtures, etc.).

The plumbing, mechanical, and electrical systems are required to operate properly and not impair the use of the house, or cause an unreasonable risk of fire. However, no action is allowed for defects in these systems after four years from the date of the original construction. This language suggests that these systems only need to be designed and installed so that they remain serviceable for a four-year period, which is a small percentage of a house’s normal life span of 50 to 75 years. Changing or repairing these systems because of material or installation defects can be expensive, disruptive to the structure, and should not really be necessary during the normal life of the house.

Paint and stains shall be applied so as not to cause deterioration to the building surfaces for as long as the manufacturer warranties them, yet no action can be brought after five years. Installed irrigation systems and drainage are required to “survive” for only one year, except that a claim can be made within two years of the close of escrow.

Finally, there is a “catch-all” clause that states the provisions in the bill are intended to address every function or component of the building, and if there is an issue that is not specifically addressed by these standards, it shall be actionable if it causes damage.

Also, if there is no representation of a “useful life” for a particular manufactured product, then the useful life will only have to be one year.

Anyone reading through SB 800 will realize that the time frames to file a claim for a construction defect are not as clear or specific as the bill intended. The fact that the bill contains some vague language, sets numerous warranty periods with various restrictions, and requires specific action on the owner of the building to maintain the building, will change how construction related issues are resolved, or tried and defended in court. A homeowner who is not familiar with the provisions of this bill could be at a definite legal disadvantage in trying to resolve a dispute involving construction defects.

SB 800 – New Rules for Builders – Part 1

If you purchased a new house after January 1, 2003, or are planning to buy one, Senate Bill 800 affects your rights as a homeowner, and the rights of a builder to correct deficiencies discovered in new construction. Senate Bill 800 was passed on August 31, 2002, and signed into law by Governor Davis on September 21, 2002. SB 800 applies to all condos, town homes, and single-family residences that close escrow after the first of this year.

This bill is significant because it makes major changes to the laws governing construction defects. Among other things, the bill eliminates the four and ten year statutes of limitations for patent and latent defects that homeowners now have to bring suit against builders. It attempts to define defects by establishing specific standards that components of a house must meet to be considered serviceable, and it creates a detailed process that both the builder and home owner must follow before litigation for defects can occur.

Up until December of 2000, a homeowner could sue a builder for construction defects as long as they were discovered within the four and ten year statute of limitations. However, in December of that year, the California Supreme Court handed down a decision in a case known as Aas v. Superior Court (2000, 24 Cal. 4th 627), that stated a builder was not responsible for construction defects unless the defect caused personal or property damage. This was a major setback for consumers and gave builders a legal defense to avoid being responsible for defective construction.

Senate Bill 800 attempts to change the effects of the Aas decision, and in the process creates an uncertain legal landscape for both builders and consumers. While the bill was drafted to provide more protection for both builders and homeowners, builders, insurance companies, and attorneys have clearly influenced its final form.

To understand the legal implications of SB 800, let’s look at what the bill entails. First, this bill states that any action seeking damages for construction defects against a builder, subcontractor, product manufacturer, or design professional, will have to comply with the requirements and time frames of this bill. The bill also says that a homeowner cannot file for a claim of defect(s) until the builder has had a chance to inspect and repair the alleged deficiency. These two requirements benefit both the builder and the homeowner.

In order to establish a claim, a homeowner must submit a written notice to the builder stating the defect(s). Then, the builder has 14 days to schedule and complete the initial inspection of the defect(s). If destructive testing is necessary, repairs must be done within 48 hours, and the costs borne by the builder. If a second inspection is required, it must be performed within 40 days of the initial inspection. After the defects have been substantiated, the builder, subcontractor, or manufacturer has 30 days to make an offer to repair the problem. These specific time periods are so restrictive that they could actually end up delaying the process and be argued by the builder or owner in court.

If the homeowner does not want the builder or subcontractor to actually make the repair, they can request up to three additional contractors to bid the repair of the defects, and then select one to perform the work. The builder would then pay the other contractor for the repairs. The builder is also allowed to offer a cash settlement in lieu of a repair. The bill also states that every effort shall be made to complete the repair within 120 days.

Under the provisions of this bill, the builder is not be responsible for defects or damages resulting from an act of God or nature, an alteration or wear and tear, a homeowner’s failure to maintain their home, or their failure to minimize or prevent damage from occurring. SB 800 puts specific responsibilities on homeowners to perform detailed maintenance (as provided by builders and manufacturers), and exercise care whenever modifying or repairing their homes. If an owner fails to properly maintain a component and damage occurs, the builder may not be responsible. Yet there is no language in the bill stating what normal maintenance is, or what specific duties an owner has to keep his or her home in good repair.

So what actually constitutes a defect? There are over 45 standards stating how certain components of a building shall function. The descriptions of the standards are very generic, somewhat vague, and essentially state the obvious. For example, the standards for components preventing water intrusion (exterior siding, windows, doors, roofs, foundations) state that the component shall not allow unintended water to pass beyond, around or through its designed or actual moisture barrier. What constitutes unintended water?

Another example of vague language in the bill is the standard for foundations, retaining walls, and other concrete surfaces, which states that there shall not be substantial cracking or vertical displacement. How much is substantial cracking or vertical displacement, one half inch, or two inches? Right now, there are no clear answers, and each situation would have to be judged separately. Without defined and measurable standards, builders and owners may not come to agreement on what really needs to be done to correct a defect.

While the standards attempt to define construction defects, they are not the panacea that the legislature had hoped for. To make matters worse, SB 800 has dramatically changed the statute of limitations within which various components are to operate properly, potentially compromising the quality of new construction. In my next column I will discuss the changes in these limitations, and what affect they will have on buyers of new homes.