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08/18/2011

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This is a great question. IMHO, as with so many other project related issues, this one has many parts. In the abstract, if this was truly a sole source item with no option for an eaqual, and if the contractor has performed his pre-bid investigation and discovered that the item is not available within a period of time that would allow it to be installed and maintain the contract schedule; AND has raised that fact pre-bid and received direction from the owner to proceed anyway; then immediately upon receipt of a signed contract and NTP issued a purchase order for that item so that there was no possible delay in the procurement process, then I would say that the Owner is responsible since the outcome is wholly out of the contractor's hands.

That having been said, these things rarely occur. Things may be functionally sole sourced, but are given an or equal option; contractors rarely ask pre-bid questions of this nature in order to preserve their competive edge; the PO rarely goes out at the earliest opportunity etc. It really seems stacked against the contractor, but then they have the ultimate control over the execution.

On the other hand, if an Owner is reasonable, and the GC is cooperative, often an accommodation can be reached to prevent discord on the project.

How about in a Retail construction scenario where the Client ("Owner") requires a specific floor for their store design and they also pay the Vendor. The owner also informed their vendor of the schedule in coordination with the GC to meet owner's schedule. It arrives 3 weeks late, results in Owner directling an out of sequence build out (put in floor fixtures before finish flooring and when flooring arrives cut it up to and around the fixtures.) How could this be anything but the risk of the Owner?

Projects should be a cooperative effort and not a game of "got ya."

The unfortunate thing about this situation is that the contractor that does his pre-bid due diligence will probably lose out to the guy that just blindly bids without a care in the world.

Theeasiest way we have found is to propose an "equal" product. The Architect most ofthetime will deny the substitute. This puts the burden on the design team as to product.
One of the questions that should be asked when putting the bid together is to ask subs and suppliers if there are any long lead items. Once supply problems have been identified, they can be managed. You should also go back to the design team with the information on the long lead items. That may induce an acceptance of a substitute.

A difference needs to be made between sole-sourced products and owner-provided products.

A sole-sourced product, whether substitutions are permitted or not, is subject to the contractor’s “means and methods” as described in the general conditions, which includes scheduling. The contractor knows what the product is and needs to coordinate delivery with the manufacturer/vendor according to the schedule the contractor has prepared. If the delivery is late, then he only has the manufacturer/vendor to blame—the owner has control over the issue. If a product’s lead time is so long that it cannot be submitted, approved, and ordered within a timeframe to allow the contractor to properly complete the project within the contract time, the owner should allow at least an extension of the contract time or permit substitutions.

On the other hand, if the product is owner-provided, which means the owner pays for and coordinates delivery of the product, then the owner assumes the risk. This assumes, of course, that the contractor gave the owner at the beginning of the project the required delivery dates according to the contractor’s schedule.

Not mentioned are possible flip sides of the equation outlined in the first comment, above.

First, even if the 'item' is in fact available timely the GC still must diligently pursues its procurement activities. If there is a long lead time, and any potential for a delay in delivery... the GC has to assess that risk as part of its project management function. A savvy GC knows that there is never a 100% guarantee of timely performance in this industry, so has to take that into account. If the GC waits until that critical last minute to confirm his order, a delay due to a glitch in the pipeline could be adjudged the responsibility of the GC.

Second, if the 'item' involves a submittal process (i.e. layout or fabrication drawings), and they are either not submitted timely, or are flawed (and must be re-worked multiple times), the consequent delay would also belong to either the GC or the vendor, or both (assuming the AE's doing the submittal reviews did their part properly).

Third, what if the GC is tardy in completing paperwork related to the purchase, or is not timely in delivering a deposit, or perhaps field measurements or other coordination information needed by the vendor before it can commence fabrication or preparation on its end?

Fourth, what if the 'delay' relates to the GC's inadequate management of the site (logistics) and the vendor is not provided with the required time slot for deliveries, or the lay-down area for its components, etc.

Fifth, what if the 'item' involves mid-construction decisions from the Owner or AE's (for example color/texture decisions, or detailing of interfaces that can only be finalized following component mock-ups during the early portion of the work)?

ETC.

As in any query related to construction, there are usually too many moving parts to allow for a simply answer. Each situation has to be evaluated based on the instant facts.

As an engineer and contractor working for a construction law firm, there is never a black and white answer.

With all the factors that are beyond the control of any one of the parties, as is typical, the claim of delay is going to hinge on who does the best job convincing the neutral decision maker to believe them over the other guy.

One thing that will help either party, is to have good documentation that is clear and concise. This keeps finger pointing to a minimum.

From experience, I have to piece together problems for litigation from old project documents, and the one with the best documentation usually gets the nod.

Sole-sourcing should not be taken lightly by an owner and architect when producing a specification. The decision to sole-source should not be a one-off deal and should be based on a justified need and past experience with the vendor (e.g. standardization of maintenance and track record of timely delivery). As someone said, problems with delivery are not typical. This may be because the owner and designer have usually done the needed due-diligence up front. The chance of a problem increases exponentially in a first time experience with a vendor and then one must fall back on the contractual provisions, project documentation, etc. Problems with a vendor you have had good experience with in the past can usually be worked out in an amenable fashion, especially if the potential for repeat work is involved. They may often try to make things less painful for the contractor who will probably have to absorb the cost of delay.

That is the kind of impact Paul Violi had on people. What an honor to have known him, and what fun, too.

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