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.

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