26 / 116
26 E L EC TR I C AL CONNEC T I ON
AU T UMN 20 1 7
CLAUSE FOR CONCERN
E
lectrical contracting can be a bit
of a gamble, in that a tender is
submitted and the hope is that the
project runs to schedule.
Contractors risk their solvency on
a multitude of factors, many of them
unpredictable. The weather, adequate
design drawings, timely delivery of
materials and the builder’s efficiency
play a large part. Nowhere is this risk
better demonstrated than during the
competitive tendering process.
The soundness of a construction
estimate is contingent on the amount
of information available at tendering
time. Interpretation of scope, accuracy
of quantities, quality of materials and
assumptions of productivity all combine
to produce a cost – exclusive of overhead
and profit – for completing the project.
Most estimators use similar take-
off methods, and the material pricing
and labour units allocated by various
estimating programs can often result
in close tender figures. However, most
variance arises in the figures attributed
to company experience with the contract
type, labour-saving methods, and
overhead and profit.
The primary job of estimators is to
produce accurate costings, but they
also have a responsibility to protect
their employers and themselves from
risk. Irrespective of company size,
someone has to assess and deal with the
risks related to signing a contract and
performing the work.
The days are gone when the electrical
estimator only had to complete a take-off,
price the material, allocate labour, add
sub-contractor quotes, establish a realistic
mark-up and submit the tender.
These days it is more complex. Almost
everything we do in the business world
involves a risk of some kind – customer
habits change, new competitors appear,
factors outside your control cause delays.
RISKYBUSINESS
Before deciding to tender on a project,
you must evaluate the risk factors.
The following are some of the risks
that should be identified, assessed
for likelihood and appraised for
possible effects:
>
Liquidated damages – especially if the
head contractor has a reputation for
late completion.
>
Project duration – a drawn-out
program may have a disastrous effect
on cash flow.
>
Liability for worker injury – an unsafe
working environment must be avoided.
>
Onerous conditions restricting rights to
a fair contract – this may put you in an
iniquitous situation.
>
Procedure for arbitration – to ensure
important facts are recorded and
contract conditions met.
>
Variation clause – ensure there is an
approval clause before installation.
>
Payment clauses – clarity and certainty
as to payment.
TIMINGMATTERS
Tony Lim (Doyles Construction Lawyers,
Australia) has covered an important topic
ELECTRICAL ESTIMATORS MUST
BEWARE OF DETRIMENTAL
CLAUSES IN TENDER DOCUMENTS.
BRIAN SEYMOUR
HIGHLIGHTS
THE RISKS.
ESTIMATING