Specifications - Part of Contract

Extra Work.

Perhaps the most prolific cause of trouble and argument on contract work is "extra work," and the payment for same. As an example of the ordinary specifications on this subject, we have the following: "No extra work will be allowed unless or dered by the Architect in writing. No bill for extra work so ordered will be approved by the Architect unless it is rendered immediately upon completion of the work." In this specification there is not a single as surance to the contractor that he will come out on the right side financially on extra work. The contractor will probably not attempt to do any extra work unless he is sure of being compen sated for it; but even when he has proper author ity for performance, the compensation under this clause may not be what he asks for. That a great deal of extra work is done on the archi tect's verbal authority is a fact, and that the bills for the greater part of it are allowed is also true; but, as in the case of the approval of sam ples by the architect, he may withhold his ap proval of payment when the result obtained by work done under verbal orders is not up to ex pectation. If the contractor were always able to obtain from the architect the written order, there would be no fault to find with the first sen tence of this paragraph.

Now, as to the second part—suppose the con tractor had done the extra work on the written order of the architect and had presented his bill "immediately upon completion of the work." Some particular piece of extra work may be found to extend over the greater part of the job, and may not be completed until the entire job is nearly finished. If such were the case, the archi tect might hold up payment for the work several months, and the contractor would have no allow able claim until, perhaps, the completion of the entire job.

And what, under this clause, is the contractor to be paid for his extra work'? Suppose in his bill he includes all items of his expense—mate rial, labor, plant, superintendence, overhead charges—while the architect's inspector has kept account only of labor and material. There will be a great difference in the amount of the bills. The architect will probably be willing to concede something to the contractor for other charges; but the percentage may not be what the contractor has figured on, and he is thus left short. Under this clause he has no redress.

Another specification covering the same mat ter, and showing the contractor a little more clearly where he stands in figuring extra work, is as follows : "In estimating the cost of such work, no al lowance shall be made to the Contractor for the use of tools or for general superintendence." This specification precludes all possibility of such trouble as mentioned above, but does not give the contractor just what he should get. Moreover, it introduces a feature that brings about a gamble on the contractor's part. In ma king the bid, he must spread over the various items such a charge as will care for the plant cost that will accrue while his plant is engaged in extra work which, according to specification, he will receive no direct compensation for. He can not tell how much of that work there will be, and so how much plant time will be unprofitable; and as a result he is working on an uncertainty. It is then evident that full cost should be allowed so that the contractor will not have to inflate ordi nary figures to take care of demands that might be made later.

A fairer specification would cover plant charges by allowing a fair percentage for the same. Here is such a specification: "The Contractor must be prepared to do any extra work that may be ordered in writing by the Architect; and for this he will be paid the actual reasonable cost as determined by the, Architect, plus 15 per cent of said cost."

This, however, has a particular weakness, in that 15 per cent is generally too low. The 15 per cent may be said to cover all costs outside of those that can be definitely charged to the extra work. The charge for labor and material can, of course, be accurately determined; but when it comes to plant charges and maintenance, superintendence and overhead charges, and the profit which the contractor is entitled to receive, 15 per cent may fall woefully short. In fact, the 15 per cent might be said to be sufficient to cover only the contractor's profit, and other charges would be left uncared for. It is perhaps meant that the architect will include plant and overhead charges in the "actual reasonable cost," but the specifi cation does not definitely state this. The archi tect might add a percentage to the labor and ma terial cost, and say that it is to cover plant and superintendence. If he does, and if the percent age is fair, the clause is all right.

The use of "actual" and "reasonable" may be rather paradoxical. Conditions might arise which make the actual cost seem unreasonable, and the contractor might suffer the consequence if the architect laid stress upon the "reasonable" part of the clause. Suppose, on the other hand, the contractor, by taking advantage of condi tions, produced the work at a much lower figure than the estimate of the architect allowed—a fig ure which might seem unreasonably low. The architect would be sure to be governed by the "actual" part of the specification, and the con tractor would gain nothing for himself by his effort to economize. In fact, he would suffer by the decrease in return under the 15 per cent item. The contractor would be entirely at the mercy of the architect, not only in the interpre tation of the clause, but in the payment for the work, according to how the architect wished to interpret "actual cost," the "reasonable cost," or the "actual reasonable cost." Another specification covering extra work may well be given as an excellent example of how justice to the contractor may be secured: "The Contractor shall do any and all extra work that may be ordered by the Architect; and, as full compensation for such extra work, the Contractor shall receive an amount equal to the actual cost of the extra work, plus 15 per cent profit, superintendence, and general expenses, plus 1 per cent per month on the cost of the plant and plant rental. The said actual cost of the extra work shall include all fuel, materials, and labor furnished by the Contractor; but it shall not include office expenses, general superintend ence, salaries, or other general expenses." Time Limit. The clause covering the time of the completion of the work is generally em bodied in the contract proper, but it is often found under "Specifications" as well. When the owner expects to be able to occupy his prop erty—say a building—at a certain time, and makes his plans accordingly, it often means a severe loss to him if he is disappointed; and to compensate this he should be able to collect dam ages because of the failure of the contractor to live up to his agreement. It is often remarked that if the damage to the owner for delay is, say, $100 a day, he ought to be willing to pay as much for the saving of time if the work is completed before the expiration of the time limit. This is not necessarily the case, as it may be that. a pen alty of $100 a day is not too high to compensate him adequately for the loss from delay; while, on the other hand, the completion of the work before the prescribed time would be of little advantage to him. For this reason, and to make it as binding as possible, the penalty for non completion on time is usually stated in the contract.