Be proactive, closely review contracts

The landscape of subcontracting is changing with the depressed economy. Due to layoffs, businesses folding or other catastrophes, there are many small start-up shops coming into being. Most small plumbing and HVAC shops get their start as a one or two man operation, usually on the strength of one job. The most common scenario goes something like this: a journeyman or perhaps two journeymen are offered

The landscape of subcontracting is changing with the depressed economy. Due to layoffs, businesses folding or other catastrophes, there are many small start-up shops coming into being.

Most small plumbing and HVAC shops get their start as a one or two man operation, usually on the strength of one job. The most common scenario goes something like this: a journeyman or perhaps two journeymen are offered a project by a friend, or acquaintance, that they cannot do “on the side” and decide to jump into subcontracting as a new business. They acquire the necessary licenses, insurance, bonding and a myriad of other things needed.

The money is tight, the suppliers are nervous and many times these newbies are working for less than their previous wages, but they are in business. The nuances of contracting are, by and large, learned on the fly through trial and error. They may be great mechanics with a lot of trade knowledge and talent, but light on business sense.

The thing most likely to sink a new company is the “subcontract.” Contract law today is pretty much black and white. In the world of contracting, things rarely go as far as a courtroom. Most of the time, a contract dispute will sink a new subcontractor at worst and cause him to suffer grievous financial loss at best.

Read it or weep

Let's say that you've finished that first project. It went so well that the general asks you to do another project identical to the first job with one exception — on the first job roof drains were called for — on this one only scuppers are required. You bid the job without the roof drainage. You and the general are both aware that the drains are deleted from the new project, but the drawings still show the details for the roof drains, and the spec book still calls them out. You receive the contract with all the right numbers in the right places, sign it and go to work.

At some point during the job, the owner and the general get into crossways with each other. The owner demands a credit for the roof drains that weren't a part of the new project, but were on the drawings and in the specs. You say, “Wait a minute! I didn't bid any roof drains, and we agreed that they weren't required!” The general, says, “Your contract says per plans and specs, give me a credit!”

Can you see where this is going? It's not right, and it's not fair, but it is contracting. You signed the document — you are liable. At best you'll be able to talk your way out of it. At worst you'll end up losing your posterior on the job.

Cover the bases

The above scenario happens way more often than you can imagine, especially since the advent of computers and computer aided drafting. Architects and engineers simply “cut and paste” details and specs from one job to the next.

You can mitigate these nasty surprises by being proactive in the early stages of a job. Scour the plans and specifications for any references to work that might remotely come under your scope. Make notes about which page the references or specifications appear on.

Make sure to exclude and detail any such references in your proposal to the general or owner. If they are not aware of the discrepancy, make them aware, get clarification and provide a cost for each item not covered.

Make sure to read every line of that subcontract and cross out anything that does not accurately reflect the work that you agreed to do. The general will scream about marking up the contract, but would you rather have an accurate contract or one that can bludgeon you into submission?

The Brooklyn, N.Y.-born author is a retired third generation master plumber. He founded Sunflower Plumbing & Heating in Shirley, N.Y., in 1975 and A Professional Commercial Plumbing Inc. in Phoenix in 1980. He holds residential, commercial, industrial and solar plumbing licenses and is certified in welding, clean rooms, polypropylene gas fusion and medical gas piping. He can be reached at [email protected].