Greg Neiderer Talks About Walker’s Solution For Sharing The Risk Of Hidden Deterioration
A common restoration construction question is “who bears the risk for unforeseen deterioration?” Contractors do not want to accept the risk of repairing unforeseen deterioration since the extent of deterioration is unknown potentially causing great financial harm to the contractors while the benefits of the repaired building accrue to the Owner. Owners do not want to accept the risk of hourly work to repair unforeseen deterioration since there is no economic incentive for the contractor to be efficient in managing labor and materials thereby causing unnecessary financial harm to the Owner.
To address this concern Walker’s recommended solution is to competitively bid unit price work, where the Owner accepts the risk of unknown quantities and the Contractor accepts the risk of managing labor and materials. Items clearly visible, such as floor and wall sealants are bid lump sum.
- The Owner, while not happy about the discovery of unforeseen deterioration, is assured they are paying a fair price for the work.
- The Contractor, while not happy about the discovery of unforeseen work – since it creates management and scheduling challenges, is assured that they will be paid fairly for this change in scope.
- Those hidden and therefore unknown items (such as internal rebar corrosion or broken welds embedded with concrete) are bid with unit prices with anticipated quantities based on field surveys.
- This does cause an increase inspection effort during repair, but really only a minor increase in effort. While inspection staff is reviewing the surface preparation (a common witness point in repair) they also perform measurements for payment of unit price work, providing fair adjustments for unforeseen conditions.
For more information, feel free to contact Greg Neiderer, PE directly.