If you’re following along with this series of articles, you will recall that I ended the last post with a list of the various pieces and parts of a successful management program. This post covers the General Agreement, your annual signed contract with your trade contractors that covers all the work they do for you.
The first question you may be asking is, Why do you need one? Lots of contractors just sign their trade contractors’ proposals and put them to work. Some people even work on a handshake without any contract at all.
Now, I am not naÃ¯ve enough to think that having a contract solves everything. In fact, just about any time I have had to enforce a contract, it wasn’t worth the effort; but having one does tend to limit the disagreements, as long as it is well written. A general agreement with your trade contractors lets you put down in writing — all your company policies — so everyone understands, in general terms, what is expected from them.
Covering all your major business policies in a single annual document also allows you to have shorter, project specific contracts that refer to the general agreement instead of a huge contract for every project.
The general agreement includes information on submitting proposals, what type of plans and specifications you provide, responsibility for permits and inspections, invoice and payment policies, safety, scheduling, insurance requirements, cleanup and waste disposal, warranties, managing changes, jobsite communication, and anything else you want your trade contractors to know or do on your jobs. In each of these categories, include all your company policies, clearly written, so everyone understands how you work.
But what should my general agreement say?
Funny you should ask. Here are some examples of things to consider in your general agreement:
Plans and specifications: Your proposal must include prices for any incidental work necessary to complete your portion of the project, including any remedial work required to meet building codes. Anything that cannot be clearly identified or that may require additional work outside of your proposal should be noted so we can inform other contractors and our clients. You may be submitting proposals on preliminary plans that will not be the same when construction begins. It is imperative that you do not work from any preliminary plans including faxes and hand sketches, or any plans that are not marked “Released for Construction”. It is your responsibility to ensure that you have up-to-date, complete construction drawings before you start work. Contractor provides working drawings for all projects.
Pricing: Trade Contractors must submit written proposals for all projects. Each proposal must include a complete description of the work and an anticipated work schedule. Price all projects as described in plans and specifications. Note any omissions or errors in these plans and specifications. If you feel that there are good alternatives, note them (with any price changes) separately. All prices must be net to Contractor, including any taxes, delivery charges, or other incidental costs. Pricing should be broken down per unit or opening, category or location as specified.
Permits, inspections and code violations: All licensed trades must arrange for permits and inspections, including meeting inspectors as required. All trades are responsible for making sure that all work meets applicable building codes. No payments will be issued to mechanical contractors before the work has passed inspection. All trades will be required to repair deficiencies in their work when required by a building official or Contractor internal inspections.
Field changes: Under no circumstances is anyone authorized to proceed with any changes unless approved in advance by the Project Manager. This may include, but is not limited to, work requested by the Owner, Architect, or Designer. We reserve the right to refuse payment on any extra work not approved in advance by our Project Manager.
A Request for Quote (RFQ) does not automatically authorize work to be performed. It is part of the process to gather information for the client that will be converted to an executed work order. Once this is complete you will be notified of when to perform the extra work noted in the RFQ.
Solicitation of additional work on a project is absolutely forbidden. Trade Contractors agree not to enter into direct negotiations with the Owner or their Architect/Designer without obtaining prior written approval from Contractor. Violation of this policy may result in immediate termination of the contract with no additional payments due.
Damage to others’ work or property: Trade Contractor or vendor may not damage previous trade’s work, existing structures or finishes in the house, or possessions of the Owner. All finished surfaces must be covered and protected from dust and damage. You must not undertake work that will affect other areas of the house if doorways, floors, etc. have not been covered for protection against potential damage.
Trade Contractors may not use tools or belongings of the Owner. Furniture and equipment must not be used as props or scaffold. Violation of this policy may result in immediate termination and/or back charge for all costs incurred to take corrective action.
And my favorite clause
Acceptance of substrate: Trade Contractors agree to accept the existing or a previous trade’s work when starting your phase of the work. When there is any rework required due to any problems that were visible existing conditions, the work and the cost will be your responsibility. Any required corrections that are pointed out to the Project Manager prior to your start of work will be repaired before any new work begins.
We found that bringing this up in advance helped avoid problems down the road. We gave the trades the right and the responsibility to point out any existing conditions that would affect the quality of their work. This might include an out-of-plumb wall that was to be tiled or poorly finished drywall or trim that was about to be painted. If they told us about it, they were absolved of responsibility, but if they didn’t tell us and went ahead and did their work, then any remedial work was their responsibility. This isn’t intended to be punitive; rather, it is a management tool to make sure that everyone can do their work efficiently and profitably.
Next up: the checklists that are the core of the management program. Stay tuned.
If you just can’t wait to get started on your own trade contractor management program, GBA Pro members can download the full set of checklists here. If you are not a GBA Pro member, and do not want to become one, you can go to my website and buy the full set of checklists. The set includes 26 individual checklists for most standard residential construction trades in Excel format along with a suggested procedure. You can personalize and edit each page as you see fit.