Advise & Consult, Inc. | September 16, 2015
During the construction bid process there are plenty of plans, numbers and other documents exchanging hands between the property owner and the general contractor and subsequently the subcontractors. Usually the most important number in the bid document is the bottom line cost and sometimes the steps taken to get to that number are pushed aside – at least until there is a problem.
This was the case recently where the plans that the construction bid was based upon was not clear as the exact size of the width of escalator to be installed. Depending on how you read the plans, it could be interpreted to be either 32 inches or 40 inches wide. The winning subcontractor submitted a bid for the 32 inch escalators and then proceeded to install the 32 inch escalators. The property owner wanted the 40 inch wide escalators installed, but, the court determined that the plan scale was off 3 to 3 ½ inches. The contractor made reference to various tick marks and dots on the plans, but to no avail. The plans were ambiguous and that the escalator installer was well justified in submitting a bid for 32 inches. The subcontractor and the general contractor could not agree as to who should pay to replace the escalators. The subcontractor sued to receive payment for the 40 inch escalator and the general contractor sued the subcontractor for all concessions they had to pay to the owner.
The court made significant note that both the contractor and the architect approved the bid from the subcontractor in what was, at this point, a clearly noted 32 inch step. Based on this, the subcontractor was not held in breach of contract and was entitled to be paid for the work to install the 40 inch escalator.
As is often the case in situations like this, the case went to appeal. The Court of Appeals reversed the trial court. It ruled that because the subcontractor was aware of the ambiguity on the plans and should have made this known. The subcontractor’s estimator testified that he noticed that the plans were not specific when he prepared the bid and there is no record of him asking for clarification of the plans. Because the estimator failed to get clarification, this means that he took the risk that the general contractor would have a different and reasonable interpretation of the plans.
So, we have learned that estimators should be questioning these confusing bid documents with those upstream contractors and to document these discussions so that, even years later, everyone will have a clear idea what was discussed.