Putting the Brakes on Substitutions

This is an encore of an article Michael Chusid wrote nearly 20 years ago. Substitutions remain an issue, and the article is still relevant.

Be involved in the entire specification process, and you'll increase the chances that the specs will be followed.

The only people who benefit from substitutions are the subcontractors and suppliers who win bids from competitors and then boost their profits by supplying lower-cost materials than those specified. Everybody else loses. This means that building product manufacturers have something in common with the specifier, general contractor, and building owner: You all want the project delivered as designed and specified.

So, instead of seeing yourself as the hapless victim of substitutions, act as an ally to the design team. From this position, you can influence the design and contracting procedures to help avoid or control substitutions.

Why specs go astray
Substitutions occur throughout the design process. You know the scenario: An architect calls and asks for assistance evaluating your product for a job. After a long discussion, you agree on details and specifications, and the architect says it's just the solution he's been looking for. But when the project appears in the plan rooms, the spec is based on your competitor's product, and you aren't even named as an acceptable manufacturer. What happened?

First, many layers of decision makers are involved on all but the simplest projects. Designers, draftsmen, project managers, specification writers, general contractors, subcontractors, suppliers, and building owners all play a role in product selection and substitutions. One of your toughest jobs is to identify everyone who influences the sale. You must provide each with the information they need to understand how your product contributes to the project's overall success. You should also help the design team as a whole develop a shared understanding of, and commitment to, your product.

Even after your product is specified, however, you must continue your sales effort. At each project phase, responsibilities may pass to new team members. These newcomers may not share their predecessors' understanding of your product, or they may have new criteria for the project. Promote your product with information appropriate to the phase: aesthetic or functional information during design, technical information during the construction document phase, quotes during bidding, and field support during and after construction.

Once the design team is committed to your product, they will welcome your input to assure they get what they want on the project. When this happens, you can use your understanding of construction documentation and the contracting process to steer the project to your cause.

Begin by helping the specifier prepare a tight specification. In my experience, most substitutions occur because the specs are not specific enough to keep out undesirable materials. Poorly written specs are difficult to enforce or to use as a basis for evaluating proposed substitutions. Offer designers complete and accurate technical data about your product, and help them specify it correctly.

When an architect or engineer still won't limit the bidding to your product alone, offer to recommend qualified competitors. Assured that the specification allows price competition among several reliable producers, the specifier should be willing to limit the spec to the named suppliers without employing the dreaded "or-equal" clause. It is to your advantage to bid against competitors with similar pricing and capabilities than to bid against unknown "or-equals."

Another approach is to encourage specifiers to write a firm "base bid" spec for your product and an alternate for other products. By doing so, the specifier will be expressing a preference for your product a preference that will usually prevail.

Assist with cost control
Design professionals may also need your assistance with budgeting and cost control. Many sales reps make a mistake by not bringing up cost during sales presentations because they fear designers will reject their product as too expensive. But architectural design is somewhat removed from market costs, so designers tend to specify quality over economy.

This creates a perfect opportunity for substitutions later, because the reality of costs will no doubt become an issue.  It is better for you to deal with it while you are still in a position to affect the outcome. If the product  cost is over budget, try to help the designer find savings elsewhere in the project. If that doesn't work, suggest a substitution within your own product line.

Discussing costs upfront can also alleviate the designer's fear that limiting a spec to one source may eliminate competition and inflate prices. Overcome this resistance by making written price commitments based on design documents. This is especially effective with big-ticket items. With a major chunk of the budget fixed, the designer can predict total project costs more accurately.

If appropriate, negotiate a contract directly with the building owner or as an owner-selected subcontractor. If the owner has an ongoing maintenance program, try to establish a corporate purchasing program where you become the preferred supplier in exchange for a discount or improved level of service.

A well-written project manual spells out procedures for proposing substitutions in an orderly way during the bidding or negotiating phase. Proposed changes, if acceptable to the designer and owner, are added to the bidding documents and become part of the construction contract. Any changes that take place after the execution of the contract should be formalized with a procedure called a change order. Change orders are usually reviewed by the designer, owner, and contractor since they are legally binding and can change the contract requirements and price.

Despite the change-order process, many substitutions occur informally during the submittal process. Specification frequently require suppliers to submit shop drawings, product samples, or other information about the materials. Often, a product not complying with specifications is submitted and is then considered as an acceptable "or-equal" if the contractor or architect does not specifically object.

When such changes result in building failure, the architect and contractor often accuse each other of inadequate review of the submittals. The entire construction industry benefits when changes are documented with a formal change order instead of a casual submittal.

Have a question you'd like us to answer?
Send an email to michaelchusid@chusid.com 

By Michael Chusid. Originally published in Construction Marketing Today, ©1994