Estimating, Etc.
A Well-kept Drop Cloth.
by Len Hijuelos

Throughout this series of articles I have talked about documentation and some forms that may be used for documenting various aspects of a project. We recently completed an interesting project and I thought I would share with you some situations that arose during the course of the project, which I think demonstrate why documentation can be so important to your financial well-being.

The project was the conversion of old four- and five-story warehouses and light manufacturing structures into an upscale hotel. Our contract was negotiated and ran something over $1 million. We have done quite a few similar projects, but this one was somewhat different in that it involved five different buildings that were contiguous to each other. We reviewed the schedule prior to signing the contract and were satisfied that there would be no problems in meeting the various deadlines. In fact, we felt that the schedule was more lenient then we are accustomed to.

Once the project started, however, we began to have concerns about the trades preceding us, particularly the mechanical and drywall contractors, meeting their schedules. We immediately notified the general contractor of our concerns and advised him that under these circumstances, additional costs might be incurred for which we would expect to be compensated. To further compound the problem, the owners decided that they wanted to accelerate the schedule in order to open the hotel in time for the New Orleans Bowl, the Sugar Bowl, and of course, Mardi Gras. Effectively, they were taking approximately three months off the schedule and we were in a whole new ballgame regarding costs.

Very quickly, we prepared a color-coded graph (3 feet x 2 feet) reflecting the original schedule as well as reflecting the new schedule. We put a lot of effort into presenting a very realistic picture of what it would have taken to complete the project as originally scheduled and what it would take to accomplish the new schedule, including additional supervision and overtime, etc. It was agreed that we were due additional compensation and it was determined that we would track these additional costs through our daily foreman reports and our job log.

Once we were on site, other factors came into play. It was established that some parts of the project had some historical significance. This brought in at least three different agencies, federal, state and local, each of which had some jurisdiction and its own concept of what needed to be done to maintain the historical aspects. The major changes involved restoring, instead of changing the fabric of the building, some faux finishes and application of fire-retardant finishes. This work was accomplished through the use of change orders and extra work orders.

When the project was mostly complete and about ready for final billing, we had a meeting to review all of the costs we were billing. Because of the documentation we provided and because we were very careful to get every change order or extra work order verified and signed by either the superintendent or project manager, something less than $1,000 was disallowed out of approximately $220,000 of billings over and above our contract price. The owners were not particularly happy, but they did compliment us on the way our paperwork was handled as well as the quality of work we performed.

There is no question that this was an exacting, tedious and time-consuming effort, but there is also no doubt that without those efforts and the ensuing documentation, we would not have recovered the monies we did. We were one of only two subcontractors on this project who had a relatively easy time recovering their extra monies.

If you have a specific question or problem area you would like to see discussed, contact Len Hijuelos at P.O. Box 2585, Gretna, LA 70054 or e-mail him.