Contractors in Western Pennsylvania just got a $2.5 million reminder that when they hire subcontractors to complete part of a project, it's their responsibility to make sure it's possible to get the job done the way the project was bid.

In a recent arbitration decision, an insulation and sheet metal subcontractor asked for compensation from a general contractor for loss of productivity while trying to complete a job under difficult working conditions unknown when the project was bid.

The contract stipulated a specific work environment with minimal interruptions and interferences. Once the project started, the subcontractor discovered the work area was not what the contractor had described. Restricted access, overcrowding and the need for extra equipment made it impossible to complete the work for the price originally agreed upon.

The question in the case was who should be responsible for the extra costs: the contractor or subcontractor?

The arbitration panel decided it was the contractor's responsibility to clearly define the work environment during the initial bidding and awarded the subcontractor $2.5 million in compensation for its productivity losses and $200,000 for administrative costs. The panel said even though the subcontractor agreed to take responsibility for completing the work in a timely manner, the contractor's failure to ensure appropriate working conditions was beyond the subcontractor's control.

All Pennsylvania contractors and subcontractors should make sure they avoid getting caught in a similar situation. It's important to have an accurate, detailed plan and agreement firmly in place that reflect the reality of the job and to carefully document any changes that occur after the subcontractor begins to work on the project.

- Jim Mall,
Meyer, Unkovic & Scott,
jrm@muslaw.com

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