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August 2014   

Dirty Lowdown (Part 2)

By: Vince Bailey

In the previous installment, we identified a rather loathsome element in our industry: rogue subcontractors who cheat on the rules of the game in order to low-ball bids. We also looked at some of the devious ways these unscrupulous subs undercut the market standards by dodging the labor laws that the rest of us rightly observe. Utilizing second-tier labor subs and falsifying certified payrolls on prevailing wage jobs were a couple of common dodges that we cited.

Unfortunately, labor is not the only means by which cheaters slash costs. Some offenders cut corners in performance by implementing non-conforming means and methods and/or by using materials that fall below the specified grade. Again, the very fact that these miscreants build their ill-considered savings into their bids is evidence of deliberate intent and anticipation of cheating from the get-go.

Commonplace deceptions of the materials and methods sort are numerous in the commercial drywall industry. Utilizing a lighter gauge framing component than that which is specified, or a lesser galvanized coating than is required, tend to be a common practices among wall-and-ceiling rogues. I once watched with amazement while a competitor built an entire metal-framed condo project using 20-gauge EQ drywall studs on the exterior skin! Another time I observed a competitor build a metal-framed load-bearing job with a plywood shear-skin that was neither FSC certified nor fire-treated, as required. Other deliberate omissions might include welding, expansion anchors, deflection track, bridging, strapping and clips. Note that virtually all of these components (or lack thereof) will be concealed within the wall cavity once the drywall and sheathing are installed. While the risk of getting caught is high, and the consequences may be dire, many schemers weigh the risk versus the potential benefit, and take the gamble. "Play dumb and bury it” is their maxim. Accelerated schedules provide a healthy environment for cheaters, as their exposure time is lessened by the rush to get the skin on and get the walls covered up. Ignorance too, on the part of some general contractors, plays a role in these blatant deceptions being employed with impunity.

Fortunately, most scrupulous owners and general contractors—perhaps having been seduced one time too many by low-ballers who couldn’t (or wouldn’t) deliver a compliant performance—have implemented some preemptive protocols aimed at separating the wheat from the chaff in the pre-construction and performance phases. These various screens and checks include the submittal process, third-party inspections, pre-qualification questionnaires, bonding requirements and several federal and state labor laws, previously discussed.

Probably the first checkpoint a non-conforming sub will encounter besides review and execution of the contract terms, is the submittal process. Unfortunately, without substantiation, it is also rather ineffective as a safeguard against blatant chiselers. Submitting to the GC and architect the compliant product data on the specified materials and products merely establishes that the subcontractor knows what the documents require. The barefaced dodger will simply offer a set of compliant submittals and deliberately deviate from them in the performance of the job, perhaps offering the excuse that his inferior (less costly) material is "an equivalent” if indeed the substitute is discovered.

This is where the concept of a third party inspector, AKA "the enforcer,” comes into play. Most often hired by the owner, but sometimes retained by the GC or even by the sub as part of the required general conditions, these construction professionals make regular visits to the site to inspect and verify that all subs are in compliance with the requirements of the subcontract documents while the work is still exposed. For instance, he will confirm that all materials used in the construction are those that were presented in the submittal process. He will verify that all welds, anchors, clips, bridging, track and strapping are provided and installed per plan before the wall or ceiling cavity is covered. Obviously, the mere mention of a third-party inspector is an advance deterrent to a sub who is contemplating shortcuts.

Another effective deterrent to under-established (read: low-ball) subs is the general contractor’s pre-qualification form. This usually lengthy questionnaire basically establishes, from the responses to a series of questions, whether the prospective bidder has the background, experience and financial backing to perform the targeted work within the requirements of the documents. The implied message is thinly veiled, if at all: under-qualified contractors need not apply.

Bonding requirements pretty much serve the same purpose as the financial portion of the pre-qual. The level of risk with a sub is made pretty transparent by his bonding rate and his limit. Careful GCs prefer the belt-and-suspenders approach to an unfamiliar sub, employing both bond requirements and a favorable completion of the pre-qual form.

Still, as daunting as these laudable deterrents may seem, too many rogue subcontractors continue to get in under the fence and spoil the grazing field in spite of all the screening. Sometimes the bottom line is all that matters. Sometimes cheaters win. And that, my friends, is the dirty lowdown.

Vince Bailey is an estimator at E&K of Phoenix.

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