“A teacher once said:  An arrow only moves forward after being pulled back.  Maybe life isn’t punishing you.  Maybe it’s preparing your next direction.”  K.P. Vinayak

“Observe how difficult it is to change yourself and you will understand how naive it is to try to change another person.”  Voltaire

“The more I study happiness, the more I realize it comes down to one thing:  living in alignment with what truly matters to you.  Not success.  Not stuff.  Just a life that feels like yours, where you wake up glad it’s your day, where you’d choose your own life again if you could, where your joy isn’t borrowed from someone else’s approval, and your worth isn’t hanging on what you achieve next.  Because anything less isn’t really living.”  Linda Marshall

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When writing my piece on the history of the payment practices in our industry, I was thinking of the other rather drastic changes in our industry that have evolved since I entered the arena in June of 1968.  Our industry has always been complex and to complete a major commercial building, from the early beginnings of a dream and a mild sketch to the opening of the doors to the public sometime after the completion of construction, has to be considered somewhat of a minor miracle.

When I first started work for Kummer Construction Company–a small but rapidly growing $5M a year GC–we did not have a subcontract form that we asked subcontractors to sign.  We simply signed their proposal and returned, whatever it may have said.  This is how they proposed to do the work and this is the price they want, so be it.  If we have any change that we felt may be necessary to remember, we would just write a note on their proposal and initial it and the game was on. If their proposal was one page, well then, our contract was one page.  

Our owner contract was based on the universally accepted AIA design/build contract with a defined set of AIA general conditions that applied to all parties.  In mild negotiations, there would possibly be a handwritten change or two to the contract, but typically there were no changes on either side of the table.  The plans and specs were the governing documents and everyone knew that.  If it was on the plans, that is the way you built it, using the materials that were specified.  All parties knew this, accepted this, and proceeded accordingly.  If contractors did not perform as expected, in accordance with the plans and the specs, the AIA contract and general conditions defined the next steps necessary for resolution, and those terms and conditions were, for the most part, fair to all parties.

If there were changes made through the building process, we would agree with the owner as to a cost change and then, if the change involved our subcontractors, we would simply make a note with red ink on their proposal form that included the amount.  At the end of the project, we would add all the red ink notes to the initial proposed amount and that was their adjusted contract amount.  If the sub incurred costs against that change during the month, they were expected to invoice for those costs and we would pass those costs on to the owner in our comprehensive GC payment application.  Payment was then made for that change during the month, regardless of whether a formal change order was made or not.  It was expected by both parties that the paperwork would eventually catch up.  Since we were working with estimates against a grand total, there was plenty of time to make adjustments at the end.

Contracts were pieces of paper that defined the terms of engagement but they were then tucked away in a file drawer and barely mentioned again.  All sides knew their respective responsibilities and proceeded accordingly.

Where did those times go?  What keeps us from going back to simpler times?  Is it because we love to argue and fight over the silliest, meaningless things?  What are we afraid of?

I reviewed a GC contract for a sub last week and was amazed at the language.  The expectations of this GC were staggering, although I must say probably not much different than any other general contractor working on major commercial projects.  One attorney comes up with an all protective clause for their owner, the other attorneys out there jump on it and quickly make it a standard way of doing business.  The general contractors in our land graciously accept these terms for fear of losing the project and then they pass on the terms to their subcontractors, who cannot afford the luxury of an attorney review and who are at the mercy of the marketplace.  Most subcontractors read over the scope and double check to make sure the amount is correct and then sign and return and hope for the best.  If they would go through a more thorough review and request multiple changes, more likely than not, the general contractor would not agree to those changes–regardless of what terms were written on the subcontractor’s proposal.

Is this the way we want to do business in our industry?  It seems to me the days of knowing each other, talking with each other, trusting each other, are long gone.  What happened to the AIA and the AGC—are they satisfied with the industry method of dealing with trade contractors?  On top of the one sided agreements that trade contractors are expected to sign, the trade contractors–the ones incurring the daily costs–don’t get paid for their work until they have invested their life savings, and more, into a project.

Somewhere in the middle of the 1968 days and the 2026 days, lies a much fairer set of contract conditions where all parties can once again have fun in participating in a major project, contribute to its success, and get paid for their contributions quickly and without creating a firestorm on a monthly basis.  In my early days we used to have a celebration of sorts when the project finished and all participants would gather, shake hands with each other, tell stories of their times together, and share opportunities that may be out there on the horizon.  Now, it is two to three years after the construction is complete before everyone is paid–there is no time for a party atmosphere.  At least for the trade contractors.

This industry used to be fun.  Now, it is a struggle from start to finish for the trade contractors and their workers, the industry people we should be welcoming to our sites with open arms.  We have mental health issues galore and we talk about these issues incessantly; yet we ignore the unworkable ontract provisions under which we work.  I wish I could say that change is in the works.

Sorry for the rambling but this has been on my mind as I try to advise the smaller firms entering our industry.  Sometimes I feel like I am leading them into a battle they can’t win and that weighs on me.

We are getting close to the end of another business year–keep pushing for a happy ending.

“Let us not look back in anger or forward in fear, but around in awareness.”  James Thurber

WBEDC

Ron