Being a general contractor is challenging. They enter into contracts with project owners to deliver finished projects in accordance with the plans and specifications within the confines of a tight budget and schedule. Further complicating the matter, so much of a general contractors’ success is dependent upon the effective performance of their subcontractors. Thus, the success of any given project is largely determined by how well the subcontractors execute their respective scopes of work.
A symphony orchestra is a useful analogy. The conductor of the orchestra has immense responsibility to coordinate the efforts of dozens of individual musicians to create a beautiful, cohesive piece of music. Each of the individual musicians has a specific role to play within the larger musical work. While the conductor can signal particular directions from the podium, those signals don’t actually make any sound–that is the musician’s responsibility.
The same is true on the jobsite. The general contractor can provide direction and coordination, but it’s up to the subcontractors to actually build the project. So, the general contractor’s fortunes are inextricably, and sometimes precariously, tied to the subcontractors’ performance.
There are many risks associated with entrusting the physical construction of a project to a team of subcontractors. The most prevalent of these is the possibility of the subcontractors executing their work poorly, incorrectly or out of compliance with the plans and specifications resulting in what’s known as faulty workmanship. For example, the plumber’s errant use of 3” drainpipe instead of the required 4” drainpipe throughout a building would be mortifying, and costly to repair, for the general contractor once discovered.
There are a number of best practices general contractors can adopt to reduce the risk of faulty workmanship impacting their projects.
Naturally, preventing faulty workmanship from occurring is the most effective strategy and below are some steps a general contractor can take to achieve that goal:
Of course, the construction process is still highly human-driven and humans occasionally make mistakes. In the event faulty workmanship occurs on a jobsite, the general contractor’s best course of action is to immediately halt the work and take proactive measures to correct the work. Ask trade contractors to correct their work (at their expense) to achieve compliance with the construction documents as they have a contractual obligation to do so. Do not engage in any efforts to conceal the issue. Once discovered post-construction, latent defects may result in financial and reputational costs to the general contractor that could have been avoided by addressing the problem during the construction phase.
Finally, there are several risk transfer tools that protect general contractors against the financial impacts of faulty workmanship. General contractors should consider the benefits of implementing the following forms of financial risk transfer across their portfolio of work:
Whether taking proactive measures to prevent faulty workmanship from occurring, actively managing the incidence of faulty workmanship appropriately or safeguarding against the financial impacts of faulty workmanship through risk transfer, general contractors should plan for and make use of all appropriate strategies to deal with the risks associated with faulty workmanship as such risks are intrinsic to and present on every jobsite.
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