Legal Consequences of Shop Drawings and Submittals

CSI Webinar: No Exceptions Taken:

Understanding the Legal Consequences of
Shop Drawings and Other Submittal

Speaker: Gerald Katz, Esq.

Architects and engineers routinely stamp shop drawings and other submittals with vague language—e.g., "no exceptions taken"—intended to limit their scope of, and liability for, submittal review. This seminar discusses the legal significance of these disclaimers: how do courts treat these disclaimers and what are the consequences for other project participants, such as owners, contractors and subcontractors? 

The seminar also discusses related issues such as the contractual process under which submittals are prepared, submitted, reviewed and approved; the consequences of approving defective submittals; a contractor's obligation to review and approve the submittals of its subcontractors; and statutory obligations affecting submittals. 

The submittals process is vital to any successful project. Delays in submittal submission, review and approval can—and often do—significantly impact the project schedule. This seminar will address the often-overlooked contractual and legal issues surrounding submittals that owners, architects, engineers and contractors face on projects every day.

Learning Objectives
  1. Understand the obligations under standard-from contracts of the owner, architect, engineer, contractor and subcontractors in connection with shop drawings and other submittals.
  2. Understand the legal significance of disclaimers and liability limitations used by the architect or engineer as part of their stamps.
  3. Understand the consequences to an architect for the approval of shop drawings and other submittals.
  4. Understand the architect's liability for delay in approving or taking other action on shop drawings and other submittals.
  5. Understand the contractor's obligation to review and approve shop drawings and other submittals.
  6. Understand the statutory obligations of architects and engineers in connection with shop drawings and other submittals.
Credit: 1.5 AIA CEHs, 1.5 PDHs

Select a Webinar Format:
On-Demand Webinar  $55.00 for CSI Member, $75.00 for Non-member

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Substitution Abuse

This is an encore of an article Michael Chusid wrote two decades ago. The situation has not changed much since then.

Too many architects refuse to accept responsibility for their actions or to recognize the consequences of their behavior when it comes to the enforcement of project specifications and tolerance of product substitutions. During a complex building project, it is, inevitable that some substitutions will be used in lieu of specified products. In moderation, substitutions provide a sort of value engineering, save time and money, and introduce innovative solutions. But too frequently the integrity upon which the construction industry depends is disregarded and substitution abuse occurs.

Architects usually blame substitutions on the avarice of contractors who gamble on increasing profits by cutting corners or on suppliers who arc unavailable when design assistance is needed, but who materialize at bid time. Architects, however, must accept responsibility for their own behavior rather than look for ways to justify it. We must enforce fair and practical procedures for substitutions, and refuse products that do not meet specification. For those who give in to temptation and become substitution abusers, the consequences can be severe.

Building Failures
Substitution abuse greatly increases the potential for building failures. The myriad products on a building must be carefully researched and coordinated throughout the design and specification process. Substitutions made during the bidding process or during construction are seldom given the scrutiny afforded the originally specified products. This occurs  because, too often, insufficient time or money is allocated for contract administration. Decisions about substitutions am made under pressure from bidders, the contractor, or even the owner, leading architects to use products with which they have no experience. And because the design team that specified the product often has broken up by the time submittals are considered, substitutions may be evaluated by individuals who do not understand the original design intent.

According to estimates by a leading forensic engineer, building failures are ten times more likely to happen when a substitution is involved than when the project is built according to spew. Also the legal claim of responsibility for an inadequate substitution is a difficult charge for an architect to defend against.

Substitution abuse increases failures even when the substitute product is apparently similar in quality to the specified product. While proposed substitutions may be compared against the specified product, the effect of a substitution on related construction may be overlooked.

Sales Support
Architects depend on building product manufacturers and sales representatives for far more than just keeping catalogs up to date. Few architects have comprehensive knowledge of all building materials, sorely on reps as uncompensated consultants. Many architects, for example, depend on hardware salespeople to prepare hardware schedules or on roofing representatives to inspect existing roofs. Architects also have become accustomed to using manufacturers' toll-free telephone numbers and getting next day delivery of catalogs, details, specifications, and samples at no charge. While paying for these services may seem inconceivable, it may come to that unless the architectural profession starts re-asserting control over substitution abuse.

Many suppliers are reducing their architectural sales forces and placing greater importance on selling directly to contractors and to building owners. "Why should I spend time with architects," many building product manufacturers ask, "when they can't even enforce their own specs?"

Architectural Credibility
Substitution abuse erodes the foundation of confidence and authority upon which the status of the architectural profession is based. From our historic stature as master builders, the profession has gradually but steadily retreated from a position of authority with regard to construction. By allowing nearly uncontrolled substitutions, architects further undermine their position. Once contractors realize the ease with which they can break a specification, then what will be their impetus to comply with any architectural requirements? And once building owners perceive that their architects' specifications are not fixed and that contractors are making most of the actual product selections, then what will be the impetus for an owner to hire an architect instead of a design/build contractor?

Architectural firms must develop and enforce clear and practical specification policies regarding product selection and substitution procedures. And contract documents must say what you mean and mean what you say. To provide competition without the problems of substitutions, architects should avoid specifications that name a single product "or equal." As recommended by Walter Rosenfeld in Progressive Architecture (October 1990, p.53), architects should "do the research to find the three acceptable products before bidding (or pricing) starts, not during bidding or after construction has begun." After the start of construction, substitutions should be treated formally as change orders instead of casually as shop drawing submittals. Firms must allow an adequate budget to review  substitutions and prepare their clients to pay for this service. As a project moves from one phase of architectural service to the next, new members of the project team must be oriented as to why certain products were selected. To break the habit, substitution abuse must become part of the architectural agenda. It must be discussed in architectural and trade associations and included as part of each firm's quality assurance program.

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By Michael Chusid
Originally published in Progressive Architecture, Copyright © 1991

Budgeting for architects’ declining role

This is an encore of an article Michael Chusid wrote fifteen years ago.
I'm working on my marketing budget. The importance of architects to building product sales appears to have decreased during recent years. If my perception is valid, can I afford to reduce my allotment for architectural marketing? - R.K., president

Many building product marketers share your observation about the declining importance of architects. This perception, along with business downsizing pressures, has made it relatively easy for building product firms to justify cutting architectural marketing budgets. But the level of marketing you direct toward architects should be based more on your specific situation and opportunities than on the overall market.

Much of the perceived decline in the architect's impact on sales stems from reality's stark contrast with the stereotype of the architect as a hero who wrests form from chaos and by whose word the fate of a building product is cast. While this image may have a basis in the historical role of architect as master builder - think of Frank Lloyd Wright - it has little to do with how we build now.
Many building product reps and sales and marketing managers often overestimate the importance of their clients. Sales reps can become disillusioned when they realize that the greatest heroism of a typical architect is perseverance in the face of rejection, economic cycles, and other business challenges. When a sales rep realizes an architect's actual role in building product specifying, he may attribute it to a changing marketing environment, rather than admit his own perception has sharpened.

Besides this perception issue, several trends are reducing the significance of architects to building product sales.

Architects have never had a monopoly on building design, and the limited estate they can claim is shrinking. Many buildings--including single family homes, agricultural buildings, industrial processing facilities, and remodeling - do not require an architect's seal in most states. In recent decades, the growing use of pre-engineered industrial buildings has decreased the need for architectural services, and other design  professionals have steadily made inroads onto the architect's turf. Interior designers and professional engineers, for example, have expanded their jurisdiction.

As construction becomes complex, architects must increasingly rely on teams of consultants to design the structural, mechanical, electrical, and special systems that go into contemporary buildings. As a result, for more than half of the construction budget, the architect's control has become coordination and not specification. Further exacerbating this trend, many large construction projects now use construction managers to make crucial product decisions, leaving architects with responsibility for only aesthetic and functional design, not product selection.

Building owners have also changed. Many corporations, especially those with large building programs, have in-house facility management departments that take an active role in specifying products to be used in their buildings.

Liability issues have reduced architects' roles, too. The typical contract between an architect and his client used to give the architect authority to stop work on a construction site if it was not proceeding to the architect's satisfaction. A series of court rulings determined that if architects had authority to stop the work, they also had responsibility to do so if the work created a hazard or was faulty.

Rather than accept liability for construction errors, the American Institute of Architects led the profession into retreat. More recent editions of the AIA's standard form for owner-architect contracts now require the architect to provide only observations of the work's progress. While interpretation of this remains an evolving area of law, it has amounted to an abdication of professional responsibility that extends to how architects write and enforce specifications, including their readiness to accept substitutions.

Demographic data also reveal why marketing to architects may be having less impact. According to "Are There Too Many Architects?" by R. Gregory Turner in the October 1995 issue of Architectural Record, current demand for services on a per-architect basis is about half what it was 20 years ago. There are about 150,000 architects in the country, nearly three times as many in the mid 1970s. But construction activity during this same period has been fairly stagnant. Translated into building product marketing terms, today you have to make three times as many contracts to reach the same proportion of architectural prospects, yet each architect only specifies half as much work.

Marketing response
Confronted by these trends, many building product firms have simply walked away from proactive architectural marketing, focused instead on contractors, dealers, owners, and even end users. Still, for many products, strong arguments can be made in favor of staying engaged in the architectural arena.

But because their role is declining, you must improve the cost effectiveness of your marketing to architects. You can do this by increasing your sales per contact, which can be accomplished by selling products through your architectural sales force, and by improving the impact of your advertising and public relations.

Another approach is to decrease your cost per contact. Common ways of doing this include using telemarketing instead of personal sales calls and selecting more narrowly targeted advertising media. Computerized media, for example, may eventually offer lower costs per marketing contact.

Before abandoning the architectural market, review your approach to it. Can you sharpen the definition of your architectural niche? Are you offering the right product mix? Are you staying in touch with architects who have used your product before to make sure they specify it again?

As architects rely more on a design team approach, you may need to shift your focus from just architectural firms to architects and specifiers, wherever they may be -- in consulting firms, in-house corporate construction departments, or design-build firms. Furthermore, you may be able to restructure your sales approach to become a product consultant, thereby becoming part of the design team yourself.

Finally, remember that every trend creates its own counter-trend. With fewer manufacturers supporting architects as rigorously as they once did, those building product makers that are left have the pond to themselves. When large and powerful PPG Industries decided in the early 1980s to stop promoting curtainwalls and storefronts through architects, it created a void eagerly filled by EFCO Corp., an aggressive competitor that saw that marketing to architects could be a profitable way to build market share.

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By Michael Chusid Originally published in Construction Marketing Today, © 1996

The Computerized Jobsite

Contractors use metal containers to store their tools on a construction jobsite. This practice has been updated for use with the newest tools on the jobsite, computer and other digital communication tools.

For example, the BIM Kiosk from Modulus Consulting takes the computer out of the job trailer and puts it into the middle of the action. Instead of using large tables stacked high with a printed set of water stained and wind blown plans, the crew can refer directly to digitized versions of all the project documents and access all the resources on the web.

For the building product manufacturer, this is yet more evidence that your product literature, shop drawings, technical data submittals, Material Safety Data Sheets, and other information has to be ready for digital use in the field. For example, it becomes more practical then ever to use video instead of print for installation instructions, and for your customer service and technical advisers to use Skype instead of relying on phone calls.

I am the Victim of a Substitution

Is beauty just skin deep?
As an architect and a Certified Construction Specifier, I have spent most of my professional career trying to write clear and enforceable specifications. And as a consultant to building product manufacturers, I teach classes on how to avoid becoming the victim of substitution abuse – providing sales and engineering support to a designer only to see a competitor take the work with a product of inferior quality. Surely, with so much insight into the problem of substitutions, you might think I would be immune from them.

Think again.

I am writing this while sitting on my new bedroom floor. It is not the floor I specified, but it is the floor I have now bought.

Listen to my tale, and perhaps we can learn some lessons from it.

There is a stereotype that architects live in pristine homes that reflect good taste and a high sense of culture. But I count myself among members of my profession that have, shall we say, “different” standards. Perhaps it's because we can live vicariously through the award-winning projects we design for others. Or perhaps it's a profession that attracts individuals that are, shall we say, “different.” I really could be quite content to live in a cave. So long as the roof doesn’t leak and there are no immediate threats to life or property, my wife’s pleas to redecorate the house keep moving to the bottom of the list of how I want to spend my non-working hours and limited discretionary funds.

But she was insistent about this project. She was trying to refinance the house to get a lower interest rate, and after months of paperwork and negotiations, the lender finally sent an appraiser. The appraiser apparently did not notice that we still haven’t fixed the cracks from an earthquake fifteen years ago, or that the hillside on which we reside is rapidly succumbing to gravity. But we did get red tagged for not having flooring in the bedroom.

The caveman does not understand this because he thinks the douglas fir plywood and slab on grade – exposed seven years ago when we finally got rid of the cat-stained shag carpet from the 1960’s – is beautiful. My wife, the psychologist, suggests this has something to do with the unfinished starter home that was all my parents could afford when I was six years old, but to me cold pavement and splinters are some of the simple joys of life.

My wife got the name of someone that works cheap. He showed up with samples of a laminate floor that he said was Pergo, and gave us a great price “if you pay cash.” I know the Pergo brand and submitted to my wife’s insistence that the work proceed the very next day to meet the mortgage company deadline.

When Mr. Low Bid arrives, the boxes he carries in are labeled “Castle Material,” not Pergo. It took more than a little explaining before he understood that “Pergo” is a brand, not a generic term of laminate flooring. But he insists that it is “even better” than Pergo.

Pretending I know something about construction contract administration, I call Castle to ask for their performance data, which most emphatically is not on their website. The gentleman I spoke with at Castle agreed with Mr. Bid, “Oh yes, it's better than Pergo. It is class AC3.” To my continued prodding, he says the material is made somewhere in China, that he has no test data, and he doesn’t know who publishes the AC3 criteria or what they are. But he reassures me we should be able to get a 30 year warranty from the distributor.

I noted that the cartons have the logo of the National Hardwood Floor Association (NHFA), and decide to call them. I was not surprised to learn that Castle Flooring’s membership had lapsed, and that the NHFA only publishes standards for solid hardwood flooring, not for laminate flooring.

So I call the distributor. He concurs, “Oh yes, Castle is even better than Pergo,” but he does not have any test data or know what the criteria are for AC3. When asked about installation instructions, he says they are included inside each carton. (They weren't.) But he did fax a copy of the warranty to me – a NHFA form that has nothing to do with laminate flooring.

A bit of research online identifies that AC3 might refer to a standard published by the Association of European Producers of Laminate Flooring (EPLF). But their classification that best match the performance claimed by Castle, the distributor, and Mr. Bid is “23”, not “AC3”. I would feel comfortable with rating 23, which covers abrasion resistance, impact resistance, resistance to staining, resistance to cigarette burns, effect of a chair caster, and the thickness swelling of the flooring. But no one in the supply chain can tell me anything about these criteria.

Mr. Bid offers to take exchange the Castle Material for real Pergo at no upcharge. But I doubted this since I had already priced Pergo and knew that the wholesale price for materials is several times greater than the installed price he quoted. Delaying the project while he gets new materials also means we would lose his window of availability and we would miss the deadline for the appraiser’s return visit and jeopardize months of negotiation with the lender.

So like a good caveman, I grunt that I have to go to work, and capitulate to Mr. Bid. And I leave home without thinking to review how he was going to handle details at the steps in the room. (Big mistake on my part.)

So now I have a floor of questionable quality that emits odors that irritate my eyes. But my wife thinks it looks great and it is installed in time for the appraiser’s return visit.

As for me, I’ll just go back to my cave and wait for the hillside to collapse.

Lessons learned:

Have a written contract that includes things like cleaning up after the work.

Write a specification or use a data sheet that clearly establishes acceptable products and quality.

If you do not know the contractor’s craftsmanship, look at projects the firm has done or work out the details in advance.

Verify that the installer has a license and insurance.

Listen to your wife when she first says it is time to decorate.

Pick up your sales to contractors

This is an encore of an article Michael Chusid published 14 years ago. There have been dramatic changes during the intervening years. Now, many contractors are as connected in the field as they are in the office, thanks to mobile computing and wi-fi.

Technology, timing, and training are the keys to reaching busy contractors

Many of our customers are small contractors. They spend their days out on job sites or running around town in their pickup trucks. Because they are rarely in their offices, it's very difficult to make sales calls. Can you suggest ways to reach contractors like these? - G.C., marketing vice president

As you have discovered, the key members of contractors' staffs are usually out in the field, picking up materials, visiting plan rooms, and running jobs. Few small contractors keep regular office hours.

Technology can offer solutions. The growing use of cellular phones has made it possible to locate contractors in the field or in their truck cabs. Portable computers with fax modems are another means to reach contractors on the go.

Technology can also help building product makers deliver product information when customers need it, even if salespeople aren't available. Most small contractors are so busy during the day they have to plan projects in the evening and on weekends. Online services can give contractors information, including product literature and order status, during these off hours.

There are other ways to reach contractors in their pick ups. A major roofing company recently distributed a series of audio tapes on managing a roofing business. They suggested that contractors put their driving time to productive use by listening to the educational programs in their vehicles. The tapes gave general advice on marketing, safety, and other management topics, but also told their captive audiences about the manufacturer's promotions and customer service programs.

While your customer may not keep bankers' hours, most contractors do have a predictable rhythm to their work schedules. To reach them, your salespeople may have to make calls early in the morning, before contractors leave for job sites, or keep a pair of boots in the trunk to call on prospects in the field. Part of salespeople's jobs is to get to know contractors' work habits and identify the best opportunities to make calls.

Hilti, a manufacturer of construction grade fasteners, has made a specialty of calling on contractors in the field. Bypassing independent distributors, Hilti's salespeople deliver inventory on the spot and demonstrate the latest in tools and fasteners. Their bright red vans are familiar on job sites.

Leveraging distributors
Lacking sales fleets like Hilti's, other manufacturers have discovered a valuable alternative for reaching small contractors. Many contractors start their day by stopping at a distributor's warehouse. With such frequent customer contact, distributors can play an important role in promoting your product.

However, most distributors are geared toward taking and filling orders, not selling. If you want sales leverage from your distributors, it is up to you to motivate them. And you must train them so their staff can speak authoritatively about your product.

One strategy is to bring key personnel from each distributor to your plant for training. If you can't justify this expense, bring training to them with seminars, videotapes, and hands-on demonstrations.

Besides technical presentations, include sales training, so distributor staff know how to ask for an order. Davis Colors, a leading manufacturer of concrete pigments, trains counter salespeople at ready mix dealers to ask, "What color do you want?" to encourage customers to get pigments added to their concrete.

After you have trained the distributors' staff, offer to train the distributors' customers. Most leading distributors will let you use their warehouses or yards to train local contractors. Such after-work sessions are great opportunities to build goodwill for you and your distributor. If you include a hands-on segment, make sure your demonstrator is a top notch crafts person who will earn the respect of your audience.

Support your training by providing merchandising materials for your dealers. Co-op money can put your logo in local advertising, on the dealer's stationery, and on exterior signage.

Develop attractive point-of-purchase materials, such as freestanding displays and posters for distributors' showrooms, and combination show cards and literature racks for sales counters. Just in case contractors still don't get the message, encourage the sales clerks to wear shirts with your company logo.

Finally, use your sales time strategically. Time spent getting your product specified for a job means many contractors will be familiar with your product when they prepare their bids. And in every community, certain contractors set the pace for the rest. Concentrate your sales efforts on reaching these leaders, and leave the rest to word of mouth.

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By Michael Chusid
Originally published in Construction Marketing Today, Copyright ©1997

Reps who Write Specs can Ring up More Sales

By being able to lend a hand to architects, reps can lose the stigma of "salesman" and be recognized as an integral part of the design team 

This article is an encore of something Michael Chusid wrote nearly 20 years ago. It remains true today.

Q. Getting our products named in an architect's specifications is an important part of our sales strategy. What would the advantages be if our reps knew how to write specs themselves? And how can they get the training they need? - C.B.F., sales manager

A. Let me answer your first question by relating an experience I had once while working at an architectural firm. 'Joe" was a building product sales representative who carried a roofing system I had never used. He called on me several times to introduce his company and explain the benefits of his product. I became interested in his product, but, like most architects, I couldn't devote the time to research and write a spec for it.

Then one day a storm destroyed the roofs of several local schools. An emergency school board meeting was held and my firm was awarded the contract to design the re-roofing. The next morning, Joe showed up at my office asking how he would help. Since I had a pressing deadline, I asked Joe to write the roofing spec while I assembled the rest of the bid documents. He took a seat in my conference room and several hours later presented me with a well-written specification section.

If Joe had not been able to roll up his sleeves and write an effective spec Tor his product, I would have been pressured by time constraints to use another roof I was already familiar with. Joe's spec was written in the style used by my office, the format recommended by the Construction Specifications Institute (CSI). It was properly cross-referenced to other specification sections, and it showed an understanding of bidding requirements and the conditions of the construction contract. I was able to put Joe's spec into the project manual with a minimum of editing. And I saved the section in my computer to use as an office master specification.

Joe's spec was written around his company's products, of course. But because the client was a public agency that required competitive bids, Joe named several other suppliers as acceptable substitutes. By spelling out exactly what was required, Joe made sure that his competitors couldn't cut costs by bidding a lower quality product.

In my mind. Joe had ceased to be a roofing salesman and had become my roofing consultant-part of my design team. In this new capacity, he was invited back many times to bid other projects and was able to roof many of my buildings.

Why reps should know specs
While opportunities like this don't happen every day, it demonstrates how important it is for a salesman to understand spec writing. Another roofing salesman might have merely referred me to his technical manual for the specifications. Joe's product may have been no better than the alternatives, but the advantage he had was that he knew the language of the industry and was capable of using it to service a customer.

Sales reps who can help with specs and detailing are a valuable resource. Architects are typically under tremendous time pressures and cannot possibly be expert in all building materials, so they frequently rely on sales reps for assistance. In some trades, such as elevators and door hardware, specification writing is an established part of the sales rep's job. The ability to write specs is also crucial when promoting maintenance projects or other work for which an owner has not retained an architect or consulting engineer.

While it's easy to feel intimidated by 500 pages of project specifications, a rep who understands how specs are organized and prepared is likely to have a greater sense of self-confidence and professionalism. Even if the opportunity to write a section does not arise, these reps will have many chances to suggest specifications or modifications that will improve a building's design or ensure their product is used correctly. By working with the specifier, the rep has a better chance of getting his product's proprietary advantages included in the specification. And his understanding of specs will help him prepare more accurate bids and deliver projects with fewer problems.

Where to learn
I recommend taking one of the introductory classes offered by many CSI chapters or by industry groups such as the National Concrete Masonry Association. Such classes can also be presented as part of a company's sales meetings.

These classes introduce the CSI, Manual of Practice [now called Project Resourse Manual] which describes organization of construction documents, principles of effective spec writing, and CSI's recommended three-part format. The manual's latest edition has chapters on product presentation techniques, product literature, and effective technical assistance. The classes also prepare you to earn CSI's Certified Construction Product Representative designation. (Call 703-684-0300 to order a copy or to get information on classes and certification.)

It also helps to read as many specs as possible, especially the sections that apply to your product. Also, familiarize yourself with bidding requirements and conditions of the construction contract. Keep a reference file of good specifications and sections that address special conditions.

When calling on a new firm, meet the specification writer and find out how he prepares specs. Give him copies of your specs on the type of computer medium he uses. If he has an office master specification, offer to review it for technical accuracy and compliance with the latest standards. The more you know about how the specifier works, the better equipped you'll be to render assistance.

Specification writers will usually respond favorably to your interest. Consider how Joe learned to write specs. As a novice, he would write a specification and then ask experienced specifiers to critique it. He would revise the spec to include their recommendations and then give it to them to use as part of their office master specifications. In addition to helping Joe learn to write specs, this process got the specifiers involved with Joe's product.

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

Put ConsensusDocs on Reading List

An understanding of construction contracts is essential to anyone involved in building product sales. As a manufacturer, you may not be a party to the agreements between Owner, Designer, and Contractor, but the conditions of their contracts shapes the environment in which you have to perform, including warranties, submittals, access to site, payments, etc.

The American Institute of Architects' contract documents are used for most building projects, and you should be especially familiar with AIA A201 - General Conditions of the Contract for Construction.

Increasingly, however, the ConsensusDOCS system of contracts is being used. These documents have been endorsed by a coalition of 32 construction industry associations, and many find them to allocate risks and responsibilities more efficiently and fairly. Written in plain English and not legalese, they have also been developed to recognize new industry trends such as BIM, green construction, and integrated project delivery. Click here for sample documents.

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.

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

Stop Substitution Abuse

Develop strategies to convince specifiers to 'just say no.'

This is an encore of an article Michael Chusid wrote nearly 20 years ago.

I work closely with architects to get my products specified. I don't mind when they take "or equal" bids, as long as I'm competing apples to apples. But most of the time, contractors use cheaper products that don't meet the spec, and the architects let them get away with it. Does it make sense to call on architects when they allow so many substitutions? - UH., sales rep

Once upon a time, architects thoroughly researched building products and specified only those promising the highest performance for the lowest price. Contractors then dutifully furnished and installed the specified products, fearing that to deviate from the construction documents would incur the wrath of their clients and increase liability. At least that's the mythology of the construction industry. In the real marketplace, architectural specifications are frequently challenged by contractors and vendors hoping to make product substitutions that put them in better financial or competitive positions.

Occasional substitutions are a sign of a healthy competitive marketplace. When the substitution process is not abused, it makes buildings more affordable, stimulates product innovation, and responds to fluctuating market prices and availability. In fact, most bid documents even spell out procedures that encourage the orderly submittal and review of substitutions.

Frustration like yours, however, is very common. Every sales rep has horror stories about projects they lost because architects did not enforce the specifications. Indeed, many architects have assumed an unprofessional stance on substitutions. By doing so, they undermine the authority of their profession, increase the likelihood of product failures, and diminish their firms' stature to little more than that of contract drafting services.

But focusing your attention on the few architects who abuse substitutions will not help you increase your sales. Specifications remain an important key to selling many types of building materials, and most architects make a conscientious effort to enforce them. Furthermore, it is your responsibility, as a professional building product salesperson, to guide your specifications through the treacherous shoals of substitutions.

Your marketing strategy
Excessive substitutions could be a sign that you need to re-examine your marketing strategy. If yours is a commodity-type product, it may be especially sensitive to competitively priced substitutions. In general, commodity items are sold based on price, availability, or dealer service, not a designer's brand-name specification. While you may still have to call upon architects to provide support for your distributors, the onus of presenting commodity products to designers should generally be left to manufacturer's associations or industry promotion councils.

Products that are the most resistant to substitutions typically have proprietary features and benefits that differentiate them from other products in the field. One of my clients calls these "spec-locks," and prepares sales-training aids identifying the features his competitors can't match. By attempting to get these spec-locks written into the specifications, he has been able to lock many of his competitors out. Developing new spec-locks is an ongoing process, since successful proprietary products are soon copied and may eventually become commodity products. An increase in the frequency of substitutions may be a warning sign that your products are losing their competitive lead.

But even products with unique features will have substitution problems promoted on the basis of features that were of questionable value to me as a specifier. So before pricing your product, you may want to conduct market research to find out how specifiers assess your product's worth. Remember that specifiers are less concerned with your product's unit price than they are with the cost of the product in place in their building.

Gain allies where it counts
By blaming substitutions on weak architectural enforcement, you may be overlooking weaknesses in your distribution channel. Make marketing allies out of your contractors and distributors since they have access to lower priced fines and are frequently the ones initiating substitutions. Be sure they stand to gain by using your product instead of offering a cheaper one.

One way to strengthen their commitment to your product line is to make them part of the team selling to specifiers and owners. For example, invite contractors to join you when making major architectural presentations. Many contractors will appreciate the exposure and will be less likely to break the spec if they understand why an architect chose your product.

Make sure your pricing and promotions enable your client to make more money by selling up to your product. I remember one project where the HVAC contractor proposed a more expensive air-conditioning system because it was more efficient. And the roofing contractor took advantage of pricing changes that allowed him to sell a better grade of roofing for just a few cents more per square foot. In both instances, the architect persuaded the owner to accept the substitution upgrades. But on that same project, an electrical contractor missed an opportunity to increase his sale when he submitted substitute light fixtures of a lower quality.

In addition to assessing your product and your customer and dealer attitudes, you must also look at your own strength and limitations. Specification selling does not offer the instant gratification of other forms of selling, and many companies and individuals do better with a different approach. some vendors play offense: They keep possession of the ball by finding and developing good prospects, getting specified, and becoming well-positioned to make a sale. Others play defense: Their strategy is to intercept a sale during the bidding or purchasing process.

By knowing your company's game plan you can field a sales team trained to play like winners. But if you do initiate a substitution, remember that the principles of fair play should still govern your efforts.

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By Michael Chusid, originally published in Construction Marketing Today, ©1994

Put Dates on Product Literature

The following was first published nearly 20 years ago. While it addresses printed product literature, the same recommendations apply to online product literature.

When I asked an architect friend to critique my product literature, he said I should mark each piece with a date of issue. Since no one ever told me this before, I would like your opinion. -S.K., President

If your friend's experience is like mine, he is deluged with new catalogs every year. It is frustrating to have two slightly different versions of a catalog and not know which is more recent. Building-product literature should clearly indicate the date it is issued.

Some manufacturers mark literature with a form number indicating an issue date in code. However, you cannot depend on the specifier or contractor to translate your code. It is better to identify the month and year clearly in a prominent location such as the bottom of a data sheet. It may even be appropriate to state the date of superseded issues, for instance: "Effective May 1991 (supersedes August 1989)."

Some manufacturers fear that dating their literature will out-date it more quickly. But without an issue date, a specifier is likely to assume that your product is old until proven recent. When this happens he may call you -- or may select another product with more reliable dating. In either case, you have increased his uncertainty about your product.

Dating literature also helps your product liability management. By alerting a specifier to the date of publication, you are sharing responsibility with your customer to determine whether or not a piece of literature is acceptably current. When you do not provide that information, you may have increased liability for conforming to claims made in old product literature.

Copyright dates alone do not provide sufficient information to establish issue date. That's because several versions of the same document can be issued in a single year. Also, literature may he issued in preparation for a change that may not take effect until the following year.

Clearly dated literature makes it easier to discuss products over the telephone and to verify that each party is referring to the same data sheet. Dates also make it easier to refer to specific pieces of literature in a specification, contract, or shop drawing submittal. A dating program should be implemented during the normal revision or reprinting process.

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By Michael Chusid
Originally published in Construction Marketing Today, Copyright © 1992

Help architects with costs to stay in the specs

Are architects interested in what products cost? It seems most architects pay little attention to price in their designs. Twice this week I lost jobs on which my product was specified because the project went over budget and the contractor persuaded the owner to accept a cheaper substitute. What can I do about it?—A.J., manufacturer’s rep

I hear this gripe frequently from building product sales reps. There is a great deal of truth in the stereotype that architects do not maintain tight control of costs. Substitutions are often made to get costs back in line—and the specified manufacturer suddenly loses the sale. To prevent that from happening, sales reps must understand why architects do not have a good feel for construction costs.

Architects do not purchase materials, so they do not have daily contact with market pricing. Typically, only project managers or principals of firms negotiate with contractors. That means that designers and specifiers don’t get adequate feedback on the cost consequences of their product selections. Furthermore, standard architectural compensation methods scarcely allow time to research product performance, let alone encourage comparative shopping. Instead, architects often rely on previous projects for cost guidance.

Some architects feel that spending too much time weighing lineitem prices can distract them from the “big picture.” Design decisions that produce more efficient buildings or better use of space can have more impact on a project’s budget than do nickel-and-dime differences in building products.

Architects must consider hundreds of products in a typical building, and few are fluent in the pricing of all those products. While the sale is vital to you, it may represent only a tiny fraction of the total project. Sales reps often become so focused on their own products that they assume architects share their degree of interest. Instead, make the effort to become familiar with the whole project and understand how your product fits in. Then you can act as a cost consultant to the architect.

To do that, think of construction costs as part of an equation in which the other factors are project size and quality. If any two of those factors are fixed, they will determine the third. For example, if the size of the project is known (a school for 400 children) and the budget is fixed (bond money available), those criteria will generally establish the quality of the materials used (such as whether carpet can be afforded instead of resilient tile).

Ask architects about the trade-offs they must make among size, cost, and quality. Be prepared to discuss the costs of installation and of complete building systems, not just your piece of the action. Shift the focus from cost to value by emphasizing life-cycle economies. Provide price lists or pricing guidelines in your technical manuals. Offer designers product options at several price points and help them understand what they can get for their money. If you see the project is over budget, suggest your own substitution. Your willingness to share your product cost knowledge will increase your influence with your customers.

While it is unlikely that architects will change their outlook on costs, their tools will change. Databases of construction costs and product specs are being linked to computer-aided drawing systems. The new hybrids will semi-automatically take off material quantities and calculate cost estimates. As these systems are refined, they may enable architects to become more cost conscious without really trying.

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By Michael Chusid
Originally published in Construction Marketing Today, Copyright © 1992

Substitution Story - Sand Between Coats

A sales rep working for a major paint producer, recently told me this story:
Our Company was not named in the project specs. The contractor submitted a substitution request to use our products, and our brand's reputation made it easy to get a change approved by the architect.

A few months later, the contractor called asking for help. The spec said to sand surfaces lightly between coats. This is a reasonable requirement with most brands of paint since sanding typically improves adhesion.

However, the contractor was using our newly introduced line that was especially formulated to adhere without sanding, and we had plenty of test data to substantiate the claim. In fact, our product literature recommends against sanding. The spec clearly said to follow the manufacturer's application instructions, yet the owner's rep still insisted on sanding between coats as specified.

The contractor had paid a premium for a labor saving product, but still had the expense of sanding.
The sales rep felt the owner's inspector was being unreasonable. The conflict could have been avoided if the request for substitution had disclosed how the proposed product affected all the specification requirements. Too often, a substitution request deals with Part 2 - Products requirements, without addressing Part 1 - General and Part 3 - Execution of a spec section.